I've always found the "cash per oz" calculations provided by...

I've always found the "cash per oz" calculations provided by miners to be of dubious forecasting value, as its a backward calculation.

Its quite different for a manufacturer, where to increase units produced requires more raw material and additional labour, so the cost per unit can be calculated in advance.

All things being equal, a mine can extract and process xx tonnes of ore and based on (for example):

- the grade changing from one month to the next;
- equipment outages;
- weather;
- processing of stockpile; etc ..

the cost per oz also changes. So its not a true reflection of the efficiency of extraction and processing.

This month-to-month variation is only exacerbated for mines in ramp-up mode.

CCU management acknowledges as much by still classifying all its mine-related expenditure as "development" rather than "production".

I also agree that its not worth splitting hairs about what is "operational expenditure", "capex", "administrative expenditure" etc ... Cash out is cash out.

But I don't agree that CCU would need to double its cash out in order to double production.

I'm figuring that total cash-out per quarter for CCU will be around $14m. This means that CCU needs to produce around 200Koz/month at AU$23 to break even.

We have a little leeway if production levels are lower than 200Koz/month or the price of silver is below AU$23, as for the next 3 quarters, we get to sell 180Koz at $29.

I'm guessing that Magna and CBA have been convinced (with information that's not available to us) that by calendar 2014, production will have stabilised at 200koz/month and that the price of silver will be at least $23/oz. For example, I doubt it was a surprise to Magna or the CBA that the ball mill was installed a month earlier than anticipated.

And they've probably replaced the CEO and obtained Board representation to make sure they have good oversight on the go-forward plan.