7.1 years payback, page-7

Payback is dependent on three things:

The country you are in
The life of the mine
The cost of the mine

If in a risky country you want to get your money back as fast as possible.

If your mine life is 8 years and your payback 7 years, you are not going to make much.

If you have huge capital costs the banks get a bit skitish if you are going to take a long time to repay them. Also risk increases with time - that is you can reasonably predict commodity prices for the next year or two and hedge them to reduce risk. But you cannot usually hedge for 7-8 years.

I work in metals and for most resource projects in medium to low risk countries with a 10+ year life, I would be looking for a 2-3 year bayback. If a high risk country I would be looking for a <2 year payback.


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