Hi (Nathan21),Very interesting approach of valuation, from...

Hi (Nathan21),

Very interesting approach of valuation, from previous thread I did a quick valuation for VOR's Khongor project, using a base case with only 100Mt @ 0.7% Cu and assuming we have a CU recovery of 90%, we'll have a total of 630,000t of copper, or 1.2 billion pounds of copper.

With current Copper price above US$4/lb, VOR revenues could fetch US$4.8 billion, from that amount, we need to deduct:

1)Operating costs, which included Mining, Milling, General and Admin costs, and cash cost associated with mining royalty, transportation, marketing fees, treatment and refining charges (TC/RC) from smelters.

Khongor production would be 52,000t Copper per annum (base case)

2)Capital costs
Design, construct and commision the mine facilities (Open-pit mine, Concentrator, power, trucks, etc..)

We would know the above information once VOR has JORC resources and complete the feasibility study, but from various researches I did so far, and considering a production size of 52,000t copper concentrate per annum, Capital cost could fetch below US$500M and the same go for Operating costs.

You did mention that CAPEX and OPEX costs for a porphyry mining operation are extremely high , I did assume for my calculation that Capex and Operating costs could be approx. US$1 billion mark for this tonnage.

We also need to deduct revenues from taxes and fees payable to the GOM (Gov Mongolian) as following:
- Corporate Income Tax = 25%
- Royalties = 5% (gross sales value)
- value added tax = 10%

(Information from Oyu Tolgoi project)

From the above, I'm still quite comfortable with an NPV above $2 mark for VOR Khongor project (conservative approach).

Cheers,