Southridge Enterprises Inc (SRGE)

[I-Glow]

Cash costs are also a function of the accounting department and what they include and exclude. From, http://www.mineweb.com/mineweb/content/en/mineweb-gold-analysis?oid=158127&sn=Detail You can see that these costs are increasing:

Gold mine cash costs jumped 19% in H1 2012

While global gold mine production was at best flat in the first half of 2012, average total cash costs jumped 19% to a new high of $727 per ounce.

But as you can read from the following the All In Costs are also increasing:

A complete breakdown of costs, an all-in cost figure, courtesy of CIBC, shows cash operating costs pegged at $700 an ounce, sustaining capital, construction capital, discovery costs and overhead at $600. Add in $200 for taxes and you get US$1500.00 as the replacement cost for an ounce of gold. Using the all-in figure provides a more accurate and definitive picture of actual mining cost and profit. Also, according to CIBC World Markets, the sustainable number gold miners need is $1,700/oz. As I write this gold is trading at $1726.00/oz.

It’s obvious that its very expensive to operate a gold mine and it’s not going to get any cheaper. The reasons behind flat-lining gold production, and record cash and all-in costs, are numerous:
Production declines in mature mining areas
Slower than expected ramp-ups of output
Development time up
The entire resource extraction industry suffers from a lack of skilled people
Extreme weather
Labor strikes
Protests

Still my point to bringing some reality to the stervc DD in doing a valuation - he took the numbers from a scoping study (NOT A FEASIBILITY STUDY) and multiplied them by the present market price for gold - which is absurd and NOT real DD.

I won't haggle over $525 and $847 because I don't know what accounting methods were used - but I didn't find the average cash costs in Mexico was $525 - but I didn't look that hard as that wasn't the gist of my argument.

IG