cdu vs sfr, page-87

Sulphur credits? Is that calculated into the copper equivalent equation by CDU? no. Then we should ignore it.

Jantimot makes perhaps the most salient point here; if Oceanwide is making a transaction based on a simple exchange of "we finance this for a 10% discount" then they don't give a flying fig about the shareprice of CuDeCo. Indeed, their return on equity is a guaranteed 10% of the value of the product, regardless of how profitable the production of the product can be. The higher the spot price, the more the 10% is worth to them.

If, for some reason, copper drops to the marginal cost of production at Rocklands, then Oceanwide will still make 10% profit regardless of the fact that the EPS of CDU would then be close to zero.

Currently, OW stands to make roughly $30-50M per annum just from their offtake. That's EPS which CDU has sold up the river on you guys in order to finance the mine.

Now, this is fine and dandy. After all, money is money. However, if you consider for argument's sakes, a ten year operation selling 50Kt of Cu at a $6,000/t price, for a yearly $300M p.a. revenue, then Oceanwide has basically bought a $30M p.a. income stream for ten years for the princely sum of $120M.

$30M p.a. worth of discounted copper for ten years with a $120M buy-in has an NPV of $68M at an 8% discount rate. This is hardly a bad move considering that if this all pans out, and their CDU shares are worth at least $120M, then they have made a good 50% on their initial investment (adjusted for inflation).

They don't have to care aboutmaking capital gains.