Interesting one for investors discounting the ability to finance this project.
Obviously we've got Kfw potentially arranging and providing USD600m.
I came across this - KMPG Corporate Finance, acting on behalf of their client BCI Minerals, secured $450 million in NAIF funding for a potash project in WA. Goes to show there are big amounts of debt available and funding projects.
What I also thought interesting were some of the parameters of the project. Mt. Peake is a far superior project from free cash flow generation and efficiency.
1. total CAPEX of ~ $800m
2. annual EBITDA of ~$200m
3. Pre-tax NPV of $1.2B
4. IRR - 15% (BHP are taking years to determine if 15% is efficient enough to proceed with Jansen).
What was most encouraging and something I've raised recently is the discount rate used in this low rate environment - is 8% to high a rate to discount your cashflows.
BCI Minerals has used a 7% discount rate which I still question as being high.
To quantify that, if we use TNG's latest NPV8 of $2.8B and applied a 7% discount instead of 8%, NPV increase to $3.15B.
$1-$2 @brunod
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