Is Grade King? Post 2

This post is a continuation of yesterday’s dive into the relationship between company-wide grade and cash flow from operations. Spoiler alert, there was no relationship. This fact isn’t surprising given the multitude of other factors that impact a company’s cash flow from operations.

I decided to get a little more granular and look at this relationship on an asset basis.

The chart shows that increased production correlates with lower AISC, an expected result given economies of scale. Large scale project require large capex and, as such, require low operating costs to provide attractive rates of return. This makes sense. 

If we compare AISC for open pit operations vs. processed grades we see the trend that we were looking for! Increased grades results in lower AISC. Finally.

Similarly with UG operations, higher grade and lower opex.

Hope you find this interesting.