ball mill 100% comissioned, page-17

Hi JD,

I doubt that there will be a cost of production for June, as I still think that CCU will claim the mine is in commissioning phase, so will continue to classify "mining expenditure net of silver sales" as "development".

I even suspect that it will be reluctant to admit it is a producer until the ball mill and the mine in general is operating at full capacity, and it will try to delay this classification as long as possible (ideally, from CCU's perspective, until it reaches 200oz/month). Here's why ...

The last thing CCU wants to do is to publish numbers that will characterise it as a high-cost producer - particularly if that price is actually higher than the prevailing silver price. To move into the realms of a "small producer" rather then a "speculative mining play", means that it needs to demonstrate steady, profitable, production.

Step 1 - establish a track record of at or near 200koz/month production (we know that this probably won't be the case until September);

Step 2 - cross-fingers that POS will be north of AU$22/oz (my number).

For all of us that took up rights entitlements, the equation has not changed in this regard.

CCU exceeded my expectations re: the ball mill, and while it is still to release any production figures, its announcements have given me confidence that it will exceed my production expectations (I wasn't expecting 200oz/month before October).

POS makes me nervous, I didn't expect it to drop below $20, but that's the nature of betting (sorry, "investing").

The recent sell down and nervousness of some investors is confusing to me. If you bought into the rights issue, you knew that the sweet spot for production (reliable 200koz / month) and POS (north of AU$25/oz) was 6-12 months off.

With the capital CCU raised, and with all of its hedges in the money (which could be cashed-in in case of emergency), we know that we've got more than 12 months for the POS to recover.