I've been comparing the original Marampa scoping study to the updated scoping study announced today.
I'm not a corporate finance expert so I'm looking for some help on the differing approaches taken to calculated the projects NPV.
In the first study the NPV was calculated pre-tax as $715m using a pre-tax WACC of 8%. At the time I think I commented that this WACC appeared extremely low. My understanding is that CFE is saying that the investors required rate of return is 8% prior to tax being paid, which is far to low for this type of project.
The WACC used in the second study appears to have changed significantly. The project NPV is stated as $1b using a post tax wacc of 10%. In simple terms the investors required rate of return is 10% after paying tax.
I see this is a far better assumption. However, am I correct?
CFE Price at posting:
45.0¢ Sentiment: None Disclosure: Not Held
