economics 101 scratch calculation

All,

Just to keep it simple so the grocers here can get it.

The 22 Sept ann said :
Stripping ratio was 3:1 (this means dig 4 to get 1 of ore)
30 million tonnes of ore
10 year life
3 million tonnes ore p.a
Mining cost $3.40 per tonne
Ore Processing cost $14.07
1.24% Cu equiv per tonne ore.
Assumed current value copper = AUD 8000/tonne Cu
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Tonnes dug = 3 x 4 = 12 million p.a.
Dig cost = 12 * $3.40 = $40.8 M p.a
Ore processed = 3 million
Cost to process = 3 x 14.07 = $42.21 M p.a
Total mining plus processing = $83 M p.a
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Revenue = 3 M x 1.24% x $8000 = $297 M p.a
EBITDA = ~ $210 M p.a
(Note 1.24% represents 37,200 Cu p.a)
Assume dividend policy is 75% of excess as dividend
Assume on-going operation $25 M p.a
Company Tax 30%
calculation Real basis (not nominal i.e no CPI assumed)
Depreciation 10% - reasonable given 10 year life ATO would most likely accept.
Assume 160 m shares
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Assume processing plant $200 M
Assume Finance = 10% interest and 100% debt.
Assume 8 year term
(not 10 years because banks want some comfort i.e. the last 2 years of operation is there to make sure loan can be repaid if delays occur)
Finance costs = $37.5 M p.a.
Assume $10 m start-up cost year 1
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Assume mining build up profile
60% 70% 90% 100% 100%..etc
Total return to shareholders is $4.43 per share over the ten years. Most returns occur in years 6-10
total over years 1-5 $1.72 years 6-10 $2.71
Net Present Value NPV(10%) = $2.51 <==******
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Sensitivity analysis
1.24% Cu is actually 1.8%, 2.0%, 2.4%
Shareholder return $8.12 $9.53 $12.37 over 10 years

Plant cost
$150 M $4.61 years 1-5 $1.84 6-10 $2.76
$200 M $4.43 $1.72 $2.71
$250 M $4.25 $1.60 $2.65

Note proper sculpting of cash flows and depreciation would shift later year returns to earlier years and level out returns
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If the Cu is 2.4% then NPV(10%) is $7.36 <==*****

Also note: CDU on-going operations are funded at current rate plus CDU retains 25% of excess cash. Important to note these two assumptions. A 100% dividend return policy would increase calculated returns obviously by 25%.

I hope this rough calculation gives some idea of current value possibilities of share price based on mining, excluding any future prospects i.e mining at Las Minerales only. Solid, not stellar, but with exploration blue sky possible maybe.

If you wish to make other assumptions about Cu%, or $/lb Cu then just do some interpolation will be close enough. Changing any other parameters won't make a difference significant enough to change outcome bigger than errors in this simple model.
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Disclaimer: If you think these homegrown calculations are of value and guide your investment decisions then you have rocks in your head. Information is for entertainment value only. Build your own damn financial model, or better still wait until you see the Bankable Feasibility study soon to be published by CDU.