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11/3/15

More "All In Sustaining Costs" baloney, Primero Mining (P.to) (PPP) edition

The Primero Mining (P.to) (PPP) 3q15 news release this morning is a work of art. That's because its numbers have very little to do with science (and much about lipsticking pigs) with a number of things to love, such as the way we're supposed to look at its cash position and ignore the deterioration in working capital, but the one for this humble corner of cyberspace this morning riffs on the point made about Detour Gold's (DGC.to) guff and nonsense about All In Sustaining Costs (AISC) last week. In much the same vein, here's a few lines on what Primero would like us to believe about the AISC of the San Dimas mine, compared to the cruel bleedin' reality:
  • Gold equivalent (AuEq) sold: 53,475 oz
  • Average realized price per Oz AuEq: U$1,115
  • All In Sustaining Cost per Oz AuEq: U$454
  • Difference between two: U$661/oz
  • Total supposed revenue difference: + U$35.35m
  •  and....
  • Earnings from mine operations: US$18.18m
And be clear, that's just the San Dimas mine (forget about the loss-making Black Fox moneypit) and that's without all the Primero corporate expenses to be ladled on top. Or tax. If that's anything even close to "All In", then I'm Chinese*.

The point here isn't about PPP, though. The point is that once again we see that AISC is a worthless metric, it tells us nothing about the reality of a mining business. Seriously, how the merry devil can a company tell us that Thing XYZ is in the least bit "all in" when it misses the true difference in its real costs by nearly half? They certainly cannot boast about it in the "highlights" section of its NR, the way Primero did this morning. It's BS, direct and sweet-smelling BS. Stop the stupid, Conway.

Or as written in that DGC post the other day, d'ya think that All In Sustaining Cost might not mean what you thought it meant? Perhaps?



PS: Once again it's worth visiting the comments and feedback from reader 'BW' that he sent in after the DGC post. You can read that here and do so, it's very insightful and much of it applies directly to the Primero situation today.

*I'm not Chinese