As mentionned previously, per my calculation, 100% of SC could offer Teck similar EBITDA as 60% of QB2 in low or high price environment.
| Estimated Annual EBITDA (US$B) |
| |
SC PEA/QB2 Reserve Case |
SC PEA/QB2 Reserve Case |
| Copper (US) |
$3.25 |
$4.50 |
| Gold (US) |
$1,500.00 |
$1,825.00 |
| Moly (US) |
$10.00 |
$20.00 |
| Silver (US) |
$20.00 |
$25.00 |
| First 5 full years |
|
|
| QB2 (60%) |
0.72 |
1.14 |
| SC (100%) |
0.70 |
1.16 |
| First 10 full years |
|
|
| QB2 (60%) |
0.66 |
|
| SC (100%) |
0.58 |
|
| LOM |
|
|
| QB2 (60%) |
0.54 |
|
| SC (100%) |
0.51 |
|
Based on QB2`s reserve case with copper at $3.25 US, the expected annual EBITDA (First 5 years) is $1.2B US.
Sumitomo, at sanction date, agreed to pay around $1.5B US for 30% of the project or $360M US of annual EBITDA (First 5 years).
SC's annual EBITDA (First 5 years) is currently $695M US or $174M US for our 25%.
If Sumitomo was willing to pay $1.5B US for $360M US of EBITDA, they should be willing to pay $725M US for $174M US at sanction date?
If the SCJV is able to increase the EBITDA by $100M US per year, that could increase the price tag to $828M US, at sanction date.
If the SCJV is able to increase the EBITDA by $200M US per year, that could increase the price tag to $932M US, at sanction date.
If SC is two years away from sanction date, in my opinion, these numbers could be discounted anywhere between 8% and 15% per year.
After, we can add $60M US for the LT copper price now being at $3.50 US, $40M CA for the milestone payments, a premium for being in Canada, and call it the day.
Who cares about the NPV (8%), EBITDA is what will drive Teck's share price!
IMO.
MoneyK
