Just to put some figures on it... a cash flow of two years at zero payments to Vale .. which is the initial agreed Pantera drilling time, followed by 12 annual payments of $3 million has a gross outflow of 12 x 3 = $36million.
However allowing for the diminishing purchasing power of money, it has a net present value or what it is worth in today's dollars effectively of $25m.Both Vale and AVB would be aware of that.
Alternatively, at a 7% discount rate, that $36m goes further down to $22m.
There are online NPV calculators where you plug in your projected cash flow and discount rate and see what it is worth.
It appears that copper within the Historical Mineralised zone has no royalty payment to Vale, but is still subject to :
"Net smelter return refers to the gross revenue an operator receives from the sale of the mine’s products to the smelter, less any transportation, insurance, marketing and refining costs. Therefore, NSR royalties are based on net proceeds received by the operator from a smelter or refinery." It takes no account of the cost of producing that smelter return, or even if the company is profitable.
So wherever you go at Pantera, royalties are payable except you pay a bit more outside the Mineralised zone.
It is trivial at this stage of events, because if AVB had grown to create a mine outsize the Zone, in addition to a mine plus plant within, then shareholders (those with faith that is) would have long since sold at a huge profit and retired to the Bahamas.
The SP would not still be vacillating around 9c, that's for sure.
Interesting the comment made by Peter Klinger quoted in "Investor Insight"of that Centro could be a lucrative (asset) disposal. I guess everything is for sale at a price so can never be ruled out. All sorts of pathways to growth are opening up for AVB.
AVB Price at posting:
9.0¢ Sentiment: Hold Disclosure: Held
