Hi all,
Yes the 10% discount rate is just the time value of money discount used in the NPV calculation, and is pretty consistent with what other miners use in their calculations.
It reflects time value of money, helps risk adjust the cashflows as well, and compounds for future cashflows.ie: to calculate NPV: forecast cashflows in yr 1, 2, 3 etc. Then divide the year 1 cashflows by 1.1 (10% discount), year 2 by 1.21 (10% compounded by 2 years), year 3 by 1.331 etc.
Depending on how risky you think the forecast cashflows are, you can increase or decrease the discount rate to reflect.
Add up each of those years of discounted cashflows and you have your project NPV.
Discount rate should not be applied directly to the price of iron ore sales
Hope that makes sense!
next boat, page-573
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