When you read about mining companies, you'll often see "cash cost" figures given for production. "XYZ Gold Corp. produced 25,000 ounces of gold from its mines this quarter at a cash cost of $676 per ounce." This is a non-GAAP figure similar to the general idea of "cost of sales" – what it takes to calculate a gross margin.

Why would anyone report something so near the top line when it's the bottom line that's, well, the bottom line? Because it's useful. The bottom line can be subject to major fluctuations from quarter to quarter, even in large companies if they get hit with one-time write-downs, changes in taxes, changes in accounting, etc. that are separate from the actual profitability of mining operations. By looking at cash costs, we can make our own estimations of how rich a company's mines are, and hence how much abuse a company can take on non-mining costs and still deliver to the bottom line over time.

For exploration and development companies, of course, there is no EBDITA, and the bottom line is almost always negative. Reasonable cash cost projections can give us a basis for evaluation when normal metrics don't apply.