I usually like to be very conservative on the boards, but let's be a little more aggresive this time and try to make everyone agree on the potential value for this project.

Production:

When using the 2013 FS numbers, my calculation brings me to a production of:

• 425 Mlbs CuEq (Y1-7)
• 332 Mlbs CuEq (Y8-21)

For 2019, assuming a 20% production increase due to waste not being waste, copper at $3.15 and gold at $1300 (conservative), the production could be:

• 500 Mlbs CuEq (Y1-7)
• 392 Mlbs CuEq (Y8-21)

Revenues:

• 2013 (Y1-7): 425 Mlbs x 3.25 x 1.03 (exchange rate) = 1,423B
• 2013 (Y8-21): 332 Mlbs x 3.25 x 1.03 (exchange rate) = 1,111B

• 2019 (Y1-7): 500 Mlbs x 3.15 x 1.3 (exchange rate) = 2,047B
• 2019 (Y8-21): 392 Mlbs x 3.15 x 1.3 (exchange rate) = 1,605B

Delta between 2013 and 2019:

• Y1-7: 2,047B-1,423B = 624M (additional net cash flow per year)
• Y8-21: 1,605B - 1,111B = 494M (additional net cash flow per year)

Operational cost:

Let's assume the SCJV is able to reduce the cost to extract one pound of copper by $0.20 CDN, that would add another:

• Y1-7: 500 Mlbs x $0.20 = 100M (additional net cash flow per year)
• Y8-21: 392 Mlbs x $0.20 = 78.4M (additional net cash flow per year)

Net cash flows:

We know that for 2013, the NCF (Y1-7) is 657M and (Y8-21) is 415M.  Therefore, based on the above, the new stream of cash flow could be as follow:

• Y1-7: 657M + 624M + 100M = 1,381B
• Y8-21: 415M + 494M + 78.4M = 987.4M

Capex: 

I'll assume a 15% capex improvement (2.7B), this will make it a 2 year payback based on the above cash flows.  Construction would be 4 years (similar to QB2) and I'll use the below outputs for the NPV calculation

• Y1: -400M
•  Y2-3: -800M
•  Y4: -700M

Conclusion:

Entering all these values in the calculator should give you a positive NPV (7.5%) around 6.9B for 100% of the project.

If anyone sees anything wrong or not plausible, let me know.

IMO.

MoneyK