Hi Mgm1a, I refer to your cash flow model.When you say yours is...

Hi Mgm1a, I refer to your cash flow model.

When you say yours is same as "theirs" - who is theirs?
I am not sure which model therefore that you are referring to, I have built mine based on RED's production and cost profile and based on their various reports etc.

With the NPV calculation and the discount rate, IMO you can decide what you are comfortable with, most analysts are far more rigorous and relate it back to the existing interest rate regime and then add margin on it based on some orderly basis. But at the end of the day, you must compare apples with apples when you are seeking to compare stocks, and apply the same discount rate for each to get a comparable basis of valuation. The RED model is based on a BFS so whilst there is some level of uncertainty (presumably around 15-25% accuracy I think the various consultants may quote) it is generally accepted to be of a basis to allow acceptable cash flow modeling. I suggest to you though, that if you can decide on 15% or 20% discount rate IF that is what you want - it just manages to kill a project far easier - and mind you, for project finance evaluations (and the NPV calculation is very relevant to work out loan life ratio, repayment and hedging ratios etc banks have historically used closer to the discount rate used for industrial stocks as I refer to above, and don't kill the thing by applying 15% discount rate - after all, there is a fair degree of conservatism built into the model in many regards.
(Note that the processing facility in RED's case has a contingency of US$6.0 million PLUS a working capital contingency of US$10.0 million - this points to me believing that RED is covering their contingencies so much that we are likely to see a big cost reduction at the time of the final costing for the plant and infrastructure!)