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