Ok, I'll put in my explanation. Brace yourself...Your confusion...

Ok, I'll put in my explanation. Brace yourself...

Your confusion arises from attempting to relate the IRR (which describes the discounted net zero money value over time) to financing interest, corporate tax, depreciation and amortisation. That is not the function of the IRR.

But firstly we look to Master Yoda reprimanding Luke Skywalker: "You must unlearn what you have learned!"
Now that the unlearning is done and dusted...

The NPV and the IRR are based on cashflows, not based on the accrual basis of the P/L.
The NPV and the IRR are closely connected because they are respectively the inverse square root and inverse square of each other, to put it very simplistically.
The PFS applies a 7% discount rate to the NPV, which then leads to a plug-and-chug calculated IRR rate of 23%. These rates are big picture or panoramic snapshots of the cashflow, not the minutiae or close-up snapshots of the net profit calculations. (Here is where your confusion started.)

The NPV and IRR figures are stated on ebitda basis, wIthin which are two non-cash items, being depreciation and amortisation.
These two items are therefore excluded because they have already been accounted for in the 40-year projected cashflow as initial capex cash outlay, and lump sum cash payments for planned exploration/drilling that can be capitalised. Otherwise, it would be double-counting.

The other two ebitda items, being interest and tax are excluded because they are subject to significant change over 40 years as a result of negotiating the re-financing T&C, and skilful use of tax planning, plus receipt of govt-approved tax concessions over time. These are the main reasons why the net profit is not calculated. The variables are too unpredictable and can be quite misleading.

As the NPV is stated at 7% discount rate in the ebitda, the implication is that even if there is no Japanese/ECA/Govt./etc. financing required (eg. by way of successful cr for $3.1B), there is still a discount rate applicable to the future cashflow to account for CPI, inflation, stakeholders' expectation of % return on cash invested, etc.

This NPV discount rate then leads us to the IRR.

The IRR calculates the highest NPV discount rate to produces a zero dollar value over 40 years of cashflow.
This means that the PFS is informing investors that the NPV over 40 years' cashflow can be discounted up to just below 23% and still remain positive. (Yes, the NPV can be a negative value.)

Now, contrasting the 23% IRR to the 7% NPV, we can tell immediately that there is a buffer of 16% in discount rate to absorb unforeseen and severe adverse events relating to a combo of CPI, inflation, stakeholders' expectation of % return on cash invested, etc.

Note that a net zero NPV value over 40 years does not mean that the business is unprofitable in each of the 40 years. In any of a future year's P/L, the ebitda could well show huge profits. Just that when that huge profit is discounted at 23% back to Year 0, the profit looks rather "meh".
It's rather like today's huge profits reported by, say CBA, if its IRR is used to discount it back to Year 0, the result will also look rather "meh".

The timing of the cashflow of significant items over each of the 40 years can produde the following combinations: High NPV High IRR, High NPV Low IRR, Low NPV Low IRR and Low NPV High IRR. It's all in the timing of high value movements and the lengthiness of the cashflow.

For example:

• A short cashflow from a 10-year LOM might produce a far higher IRR and a far lower NPV compared to ARL's 40-year LOM.
• A short cashflow consisting of a lumpsum 10 years of payment in Year 2 for 100% offtake from a 10-year LOM might produce a far higher IRR and NPV than ARL's.

Trolls who don't understand these basics tend to pounce on the low values and proceed to do what they do with baseless glee.