The ranges of prices that a Purchaser could justify paying for the Boseto Operations are:
1. Low Case: Property, Plant and equipment (PPE) AUD165M USD137M
2. Medium Case: Operating Cash Flows plus PPE AUD315MUSD261M The operating mine and processing plant should produce ~AUD150M cash over the next 2½ years as the Plutus open pit hits quality Sulphide ores and as its costs reduce to just ore-mining cost.
This valuation is supported by the Economic Assessment for the Ghanzi Copper Silver Project (http://www.marketwired.com/press-re...er-silver-project-tsx-venture-hmg-1656902.htm) which, after capital Expenditure of USD285M, delivered a NPV at USD3.00/lb, of USD173M. The purchase of Boseto would have Cupric spend say USD137M (as mentioned above) to purchase the assets instead of spending the USD285M capital, get operating cash flows for 2½ years ~USD137M (as mentioned above), and keep intact the USD173M they had valued the Ghanzi project at.
What does this leave Cupric with? An operating mine in a copper province for which they’ve paid USD 328M (USD261 above for Boseto + C67M for Hana Mining).
They could then look to on-sell the consolidated assets for USD410M:
+ Boseto cash flow USD137M;
+ Ghanzi NPV, adjusted for the project capital no longer required, of USD373M (173 + ~200)
+ mineral resources in a producing province worth say USD13M
- less project capital to develop the next resource USD90M.
Of course, they would need to find a buyer willing to pay this. There are two opportunities to improve this valuation. Firstly purchase MOD for up to USD5M to add their promising resources into the province. Secondly, sit out the cycle until copper prices recover to USD3.25/lb or better.
The big advantage for Cupric is that, if the transaction went ahead, they would have the opportunity to sell the consolidated assets in the near-term. Their only option to try and realise cash for their Hana investment would be to risk building the Ghanzi project, which apart from all the operational risks, would take more than two years.
