Mercator Minerals Ltd MLKKF

RE: production cost

[ElJ]

I respectfully recommend that we need to be very careful with costs and conclusions relative to identified costs.

Cash costs can be very different from total costs(as is the case for Mercator during recent times). In the present stage of Mercator development total costs in a specific quarter(example Q3,2008)  also carry a portion of cost for future production, due to (for example)  the expansion project ........ interest on loans which finance the capital expenditures is incurred in quarters where the planned increased production is not yet achieved, or as happened in Q3, where  mining and processing costs included the impact of strategic management decision to reduce feed activity to the leaching process and invest mining and processing activity on the new process side as a pre-requisite to concentrate production start-up,  etc....

Cash costs are certainly an important consideration, especially in tight-credit times, but total costs(including amortization, stock-based compensation, asset retirement expense, etc... )  are ultimately a key parameter. 
As an example: In Q3,2008 Mercator produced  2.97 million lbs. of copper from heap leaching and recorded 2.7 million lbs. copper sales...... for rev. of $8.85 M + $0.04 M for landscaping rev.  A significant jump was incurred in mining and processing expense in Q3  at $10 21 million compared to the $7.04 million for 3.18 million lbs production in Q2,2008.

I suggest that we need to advance through the Q4, 2008 concentrate-production-process start-up and to see the Q1, 2009 results in terms of costs and production before we can get a relatively  authentic perspective on actual production costs under the current stage of expansion. I am confident that mercator will perform very well relative to peers, but caution that cash costs compared to commodity prices per pound  is missing very significant company real(total) costs.

Peace,

Good decision-making to All,
ElJ