Attached is an expansive brokerage report from March 2006 explaining that utilising base case copper metal prices of $1.10/Ib in NPV modelling scenarios yielded very healthy future IRR returns for CMR’s Browns oxide operation:
Then we come to an extract from the following report link (http://www.businessspectator.com.au/bs.nsf/Article/METALS-Copper-hits-2-month-high-on-China-demand-ho-P4RCZ?opendocument&src=rss) dated 9 Feb-08 discussing current copper commodity pricing:
“Copper for March delivery on the New York Mercantile Exchange's COMEX division ended down 1.55 cents at $US1.6130 a lb from an overnight peak at $US1.6550, its highest level since December 1.”
So we have current copper prices of around 50% HIGHER than prices incorporated in the NPV modelling for Browns. Now you would think that even when allowing a fair old margin for higher opex costs this would still firmly remain a “goer”, yet here we are staring down the barrel being led to believe that the operation is so grossly unviable that CMR have felt the need to call in the VA. Hmmmm……. the report also mentions that the Brown’s oxide plant CAPEX was estimated at $50m, our diligent management allowed this to blow out by a mere quad factor which is the primary reason (along with the massive project deliverable time over-runs) we are in this ‘surprise’ predicament…………
CMR Price at posting:
15.0¢ Sentiment: None Disclosure: Held
