I am not sure you understand the NPV concept - any project with a positive NPV has earned it's required return ie. 8% and is worth doing.
It's not this simple, there are other factors such as the long timeframe and risks associated with the project. I know investing literature says a positive NPV means a project is doable, but there are other factors to consider such as where one thinks we are in the commodities supercycle and will some major global events disrupt the value formula that one is subscribing too. So many variables and it is difficult to choose how much to discount the cash flow each year? (5 percent less value on the cash flow each year? 8 percent? 10 percent?)
The after-tax NPV shows it is barely profitable considering the high capex - a few minor tweaks to the numbers and we are unprofitable (or quite a bit more profitable). Another way to look at this is invest 3.3 billion, plus 1.2b more over the life of the mine, and what will you get back on your money? Your money back plus the equivalent of $67 million (due to the discounts over 21 years). Sounds like a really bad investment and this is what mining guy is highlighting I believe ... no way round about it in my mind, the BFS looks ugly as is. Personally, I can't in good faith pitch CUU to people anymore, not until I see some movement from Teck or signs that a decent deal will get done. The numbers just aren't very enticing.
We all know there is more to the CUU story than the BFS as it is in all its mediocrity, but still huge question marks in my mind how Teck or others will value us. I think the key question as mentioned by others, is do they have other projects that are more economical than CUU would be (and politically stable, close to building stage and permitting, other factors, etc.) - Teck walking would be a very real possibility if they have better projects to jump in on. My hunch is they will back-in, but given our current state and BFS valuation, I think we're going at a bargain to what most feel we're worth. Really hoping I'm wrong, just calling it like I see it.
