This issue from my point of view is. If you take into account expected cash flows from the copper price around $6.5 and all in costs around $5.5, I get a discounted NPV around the $200M mark. If costs stay around the same but copper prices fall to $6 due to a global recession then the NPV drops to $100M. All very basic calculations but it does show why some are a little nervous.
With current copper prices in AUD terms providing a little buffer, but if current levels don't hold and we see a break down towards the $6 level then how profitable can the mine actually be as costs are fairly inflexible. USD copper chart looking weak. On a positive note. There is plenty of space for increased mine life and a ramp up of production. With copper prices back up above the recent highs of around $8 for an extended period of time then the NPV calculation come in closer to $500M mark as a floor.
A1M Price at posting:
29.0¢ Sentiment: None Disclosure: Not Held
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