Using Net Present Value for analysis of mining projects, page-3

  1. 402 Posts.
    I can't see your attempt but calculating a NPV should give you a rough estimate of the projects potential value today. However, usefulness will depend on the assumptions used. For mining projects you need four things; capex, commodity prices, operating costs and a suitable discount rate.

    Some tips:
    Use a discount rate between 10 and 12% (throw out presentations that use anything less than 10%)
    Use conservative commodity prices (for gold I would use $1000)
    Increase startup costs by about 20% (expect delays and costs to go over budget)
    AISC doesn't include all costs (management are often sneaky)

    Don't over think things or rely on NPV too much as its only meant to be a quick estimate.
 
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