Why bother building a mine. Porgera's output has dropped from 1.2 million ounces in 1992 to around .5 million ounces today, this is because of lower grades or lower tonnage through the plant. If IDC could toll treat their ore at Porgera which is 15 Km away they could generate profits for shareholders within a year rather than 6 years.
Capex is $218 million with 2 years construction and 4 years pay back (6 years). Add the cost of a BFS and interest to this the costs are more likely to be $300 - $350 million. They have stated revenues will be $2 billion over 8 years with pre tax profits of $1.2 billion and pay back of 4 years. With out taking into account lower grades or throughput for the first 4 years it seems to imply that $600 million pre tax profits will be required to pay back the capital over 4 years from start of production.
If they could toll treat the ore at Porgera for $1000 per ounce as a very rough high estimate, in theory they could get over $650 million per tax profits over the life of the mine with profits generated sooner than the current 6 year period.
Not a shareholder but it's on my radar and I'm sure it's on Barricks as well with their reverses due to run out in 12 years this deposit 15 km away would extend the mine life a futher 2 years. Take over target!!!
IDC Price at posting:
11.4¢ Sentiment: None Disclosure: Not Held
