When a PFS is done, it is apparently normal to reduce the Real Risk-adjusted Discount rate to 5% according to a friend of mine more experienced in these matters. For those that have the NPV matrix and playing around with the numbers, see what happens when you lower the discount rate.
Using 66,265 tons per year at a cost of $2,067 per ton, $9,000 selling price and a 5% discount rate, mining operations starting in 2020, the NPV jumps up to a staggering $4B USD.
Here is the basic info used to calculate and come up with that:
| Technical Parameters | | | Average Grade | 3.14% | | Cutoff Grade | 0.60% | | Reserve Level at Cutoff | 45,200,000 | | Contained Value | 977,000 | | Stripping Ratio | 1.82 | | Ore Production Rate (t/d) | 7,000 | | Mill Recovery | 85% | | Operating days/year | 355 | | Mine Life (years) | 20 | | | | Financial Parameters | | | Current Graphite Price ($/t) | 9,000 | | Mine Operating Cost+G&A+Selling ($/t) | 16 | | Mill Operating Cost ($/t) | 10 | | Total Operating Cost ($/t) | 26 | | Mine Capital Cost | 150,000,000 | | Mill Capital Cost | 180,000,000 | | Total Capital Cost | 330,000,000 | | Working Capital | 50,000,000 | | Real Risk-adjusted Discount Rate (%) | 5% |
The IRR is at 51% using this. If they put out a PFS anywhere close to this next year...it will be a great year for us all!
If we trade at 10% of NPV, that will be $400M USD or $520M CAN over 70M shares, that is $7 per share!
At 20% of NPV, $14, 30% would be $21.
Feel free to poke holes in this as this seems too high even for me.
But probably too low for Musky lol!
G. |
