I am slightly confused; on the surface a rise in profits should be a good thing.
But, when I read, "Gold sales were 537,200 ounces at a cash cost of $140 per ounce (2007), compared with 421,400 ounces at a cash cost of $84 per ounce in 2006", I cannot understand why is that a favorable comparison. With a 2007 "cash cost" that has increased by 2/3 over the corresponding 2006 figure (140/84 or 1.6667) hasn't an unfavorable variable been entered into the equation?
Putting it another way, the cost of a ~25% increase in production volume (537,200 – 421,400) has a drastic increased over the 2006 "cash cost." Assuming the figures presented, while holding previous volume "cash cost" at the 2006 level, one finds an extremely unfavorable cost of production for that 25% volume increase.
What am I missing here? I am not a financial-statement whiz; but... With that in mind, will you please help me understanding why these data are considered favorable, rather suggestive of a significant reduction in output efficiency?
:) |
