Interesting one for investors discounting the ability to finance...

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