Re: 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 .... The after-tax NPV shows it is barely profitable considering the high capex ... no way round about it in my mind, the BFS looks ugly as is.
The base case shows an IRR of 10.1%. Where can you earn 10% on your money nowdays with the potential of earning a lot more? Yes, there is some risk of cost overruns but there are lots of potential ways of making additional money.
But why does everyone keep referring back to the base case? We had to provide this base case in order to meet the terms of agreement. But really the Real Options Case is more important. Elmer spent a bit time explaining the ROC. He said this was based on a sophisticated model and now large mining companies use this model to do the projection. That means this is a more realistic case comparing the other cases. Now we are looking at IRR of 15.4% and a payback of 4.9 years and we still have the upside of all that waste rock.
If Elmer states that this is the model that large mining companies are using, shouldn't we be as well?
