@MUCKSTER has a good point and a valid one. There is no...

If you look at pretty much any PFS or FS report from the last 3-4 years you will find that NPV(8) is the industry standard discount rate because it is about the lowest they can get away with without sounding ridiculous to anyone who understands mining finance. Most internal studies that never get published use that rate too. A couple of companies use different numbers, 10% is not uncommon. EVN use 7.2%, I suspect because it is the rate that doubles in nominal value every 10 years.

Back in the day, Normandy and others used to use a project hurdle IRR of 20% when the risk free rate was 5%-9%. Personally I still do when looking at a project. Mining is not like putting money into bonds and the contango required is long-dated. If you dont discount for risk you end up like an Anglo-Ashanti, losing a million dollars a day when the GP moves against you.

Any project you take to a financial institution, say an Argonaut or Trafigura or whoever, will be stress-tested in their models at at least 12% and at least 20% below the underlying spot price, no matter what you have used in your own studies. Around 12% is also what you end up paying for capital raises and not far off what is needed to raise finance for most projects after you have to give the institution a bit of equity to sweeten the pot. You could therefore say that 12% is the real cost of capital rate in 2020 for new mining projects. Unless you're a BHP or Newmont, then it is about 3-5%.

$1-2/tonne. Maybe as low as 80c if they get a big enough digger.

Agreed. DGO stands for Dodgy Gaffers Organisation and they are the puppet masters. There can be no doubt of that. In the last 30 years they have hardly mined a rock themselves - only watched their betters do it. They are money miners with a mixed history of success, nothing more. They also do not have anywhere near the skills to bring this to production but probably believe they do, a dangerous combination.

@MUCKSTER has a good point and a valid one. There is no expertise to build or run such a plant in WA. Being the capital of somewhere does not make you an expert in new tech and there are plenty of examples where new tech burned so called experts in their field - HBI anyone? Ravensthorpe? Murrin Murrin? All WA projects, all high temperature and pressure processing plants. Regarding back office Russians however, I can attest that while there are many clever Russians in back offices, there are very very few in the real world of construction and operation, they're all in politics and various other mafia organisations - Real world is where Australia shines.

And as a general point after the last week or so of "who cares if it needs a POX" and "what, no-one said anything about refractory" and "what's happening to the share price, why is it going down", my 2 cents. You should care that it needs a pox, they are tricky, they cost a bomb and they are high-risk - clever people know this and so the market is reacting. By the same token - a pressure oxidation or biox plant was always going to be needed and the capex required was always going to be in the order of $0.7-1.5 billion with 4-6 years to production. If you didnt think that you werent listening. There are none so blind as those who will not see, as my old Gaffer used to say. Having said that, the recoveries that were announced are excellent, probably the best I have ever seen for a refractory ore.

Also worth keeping in mind that the share price moved from 40c to $1 in less than a month. The discovery holes took it from 5c to 40c in 4 months, on a smaller capital base, and the announcements in June were not that good. The run up was FOMO-driven, pure and simple. FA might have taken it to 50c on the merit of the announcements. The gap at 63c that plenty were talking about was always going to be filled, it's actually remarkable that the TA entry point is the exact current best entry point in the last 4 weeks (that's right, only 4 weeks, a blink of an eye). The real gap, at 52c, still has a chance of being filled - not because of TA or FA but because of sentiment. No cause for panic but dont be surprised.

Not advice, DYOR, etc.