So basically the cost to run x amount of tonnage ramains at a constant but if the grade is increased this will increase the ounces produced which in turn decreases the cost to produce the ounces.

Yes. And it's obvious when you think about it: the cost of drilling, blasting, hauling and milling a ton of rock are all the same whether the rock contains 1 oz/t Au or 0.001 oz/t Au. What you get out the other end determines the cost/oz.