value comparison, page-9

delta/mudguts

Yes, I'm referring to the EES model (from the may investor update) which projects NPV of $255m over a 14 year life with 29mlbs recovered resource which is based on ramping up production by 750klbs/year for the first 3 years to 2.2mlbs/pa ongoing.

In their model, they are using a starting price of $62.58/lb, ramping up by 2.6% pa. If you average this out. It works out to be around $75/lb over the life of the mine. Obviously this would be skewed if they sold in disproportionate amounts across the life of the mine (i.e. lots at the end at a higher price), but I don't think that is the intention.

So, this makes me believe that for PEN to be economical, they need $75/lb.

Actually, I guess I shouldn't have used the word "economical", because sure, they can turn a profit at a lower U price.

In my model if I set my discount rate at 8% (as PEN have used in theirs), the break even point seems to be around $57.75/lb. But of course no one is going to build a mine to break even and I presume for management to think it's worthwhile, they are really targeting that NPV figure of $255m...for which they will require around $75/lb.

For the record, if I plug $75/lb into my model, I also get (pretty close to) NPV of 255m, so I think my model is at least somewhat in line with theirs.

disclaimer: I'm a rank beginner at this kind of stuff, so I could be wrong... but I think I'm close. ;-)