Here's the latest.
I can't think of a more simple way to structure it for now. Typically, if the LT copper increases by $0,25 US, our valuation (25%) would increase between $60M US and $90M US, depending the option chosen.
I also adjusted the option payments to align with the current LT copper price of $3.50 US. If the LT copper price goes up, so would the thresholds in that section. Therefore, per example, if there's more upside to this project at production, we would currently get our share of it up to $3.50 US and to compensate for the additional wait, we also have some upside potential if copper goes above $3.50 US, depending the option chosen.
Finally, the discount rate was increased to 15%, which is very generous in my opinion. If Teck would decline the offer, another major could see a nice opportunity to invest some dormant money in their cash account.
For me, this is a good way to share the risks & rewards. Win-Win!
Always interested to hear all comments and discuss.
| Options |
1 |
2 |
3 |
| LT copper price (lb) |
3.50 |
3.50 |
3.50 |
SC EBITDA (100%)
First 5 Full Years ($M)
Ref. 2021 PEA |
755 |
755 |
755 |
SC EBITDA (25%)
First 5 Full Years ($M) |
189 |
189 |
189 |
| EBITDA multiple used for valuation |
4 |
5 |
6 |
Equivalent valuation ($M) for a 25%
interest in SC @sanction decision
|
755 |
944 |
1133 |
Estimated number of years left
before a sanction decision |
2 |
2 |
2 |
Discount rate per year
pre-sanction decision |
15% |
15% |
15% |
Valuation for 25% of SC
(2022 $M US) |
571 |
714 |
856 |
| Payment terms |
Shares and/or cash |
Additional payment to Copper Fox, payable annually during the First 5 Full Years of production:
| 1 |
2 |
3 |
25% of the incremental EBITDA
above $755M US up to $3.50 US copper |
12.5% of the incremental EBITDA
above $755M US up to $3.50 US copper |
N/A |
| 12.5% of the incremental EBITDA above $755M US over $3.50 US copper |
6.25% of the incremental EBITDA
above $755M US over $3.50 US copper |
N/A |
+ the milestone payments, $40M CAD, payable per the SCJV agreement.
IMO.
MoneyK
