um... this doesn't seem so great from a DCF point of view...how...

um... this doesn't seem so great from a DCF point of view...

how did they get $5billion NPV?

Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Ore treated ('000s t) 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000
Grade (NICKEL) 1.32% 1.23% 1.09% 1.03% 1.03% 1.03% 1.03% 1.03% 1.03% 1.03% 1.03% 1.03% 1.03% 1.03% 1.03% 1.03% 1.03% 1.03% 1.03% 1.03%
STANDARD GRADE 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Concentrate recovery 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91% 91%
Metal ('000s t) 48.048 44.772 39.676 37.492 37.492 37.492 37.492 37.492 37.492 37.492 37.492 37.492 37.492 37.492 37.492 37.492 37.492 37.492 37.492 37.492
Price US$tonne 18000 18000 18000 18000 18000 18000 18000 18000 18000 18000 18000 18000 18000 18000 18000 18000 18000 18000 18000 18000
Grade (COBALT) 0.13% 0.11% 0.08% 0.07% 0.07% 0.07% 0.07% 0.07% 0.07% 0.07% 0.07% 0.07% 0.07% 0.07% 0.07% 0.07% 0.07% 0.07% 0.07% 0.07%
STANDARD GRADE 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Concentrate recovery 87% 87% 87% 87% 87% 87% 87% 87% 87% 87% 87% 87% 87% 87% 87% 87% 87% 87% 87% 87%
Metal ('000s t) 4.50 3.81 2.77 2.42 2.42 2.42 2.42 2.42 2.42 2.42 2.42 2.42 2.42 2.42 2.42 2.42 2.42 2.42 2.42 2.42
Price US$tonne 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000

Inflation 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%
Exchange Rate $A/$US 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9
Smelter charge US$/T N/A

($ million unless otherwise shown)
Metal Price A$/t 0 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000 20000
Metal Revenue 960.96 895.44 793.52 749.84 749.84 749.84 749.84 749.84 749.84 749.84 749.84 749.84 749.84 749.84 749.84 749.84 749.84 749.84 749.84 749.84
Metal Price A$/t 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000 10000
Metal Revenue 44.98 38.06 27.68 24.22 24.22 24.22 24.22 24.22 24.22 24.22 24.22 24.22 24.22 24.22 24.22 24.22 24.22 24.22 24.22 24.22

Less TCIRC 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Sales Revenue 1005.94 933.5 821.2 774.06 774.06 774.06 774.06 774.06 774.06 774.06 774.06 774.06 774.06 774.06 774.06 774.06 774.06 774.06 774.06 774.06
Admin 1.00594 0.9335 0.8212 0.77406 0.77406 0.77406 0.77406 0.77406 0.77406 0.77406 0.77406 0.77406 0.77406 0.77406 0.77406 0.77406 0.77406 0.77406 0.77406 0.77406
Net Revenue 1004.93406 932.5665 820.3788 773.28594 773.28594 773.28594 773.28594 773.28594 773.28594 773.28594 773.28594 773.28594 773.28594 773.28594 773.28594 773.28594 773.28594 773.28594 773.28594 773.28594
Less
Operating cost/t 480.48 447.72 396.76 374.92 374.92 374.92 374.92 374.92 374.92 374.92 374.92 374.92 374.92 374.92 374.92 374.92 374.92 374.92 374.92 374.92

EBITDA 524.45406 484.8465 423.6188 398.36594 398.36594 398.36594 398.36594 398.36594 398.36594 398.36594 398.36594 398.36594 398.36594 398.36594 398.36594 398.36594 398.36594 398.36594 398.36594 398.36594
Year 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
CAPITAL EXPENDITURE 1444.444444 26 26 19.5 19.5 13 13 6.5 6.5 6.5 6.5 6.5 6.5 6.5 6.5 6.5 6.5 6.5 6.5 6.5 6.5
Debt Repayment 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5 32.5
Debt Outstanding 650 617.5 585 552.5 520 487.5 455 422.5 390 357.5 325 292.5 260 227.5 195 162.5 130 97.5 65 32.5 0
Interest Cost 61.75 58.5 55.25 52 48.75 45.5 42.25 39 35.75 32.5 29.25 26 22.75 19.5 16.25 13 9.75 6.5 3.25 0
EBTDA 462.70406 426.3465 368.3688 346.36594 349.61594 352.86594 356.11594 359.36594 362.61594 365.86594 369.11594 372.36594 375.61594 378.86594 382.11594 385.36594 388.61594 391.86594 395.11594 398.36594
Taxation Depreciation 65 65 65 65 65 65 65 65 65 65 65 65 65 65 65 65 65 65 65 65
Depreciation carried fwd 1300 1235 1170 1105 1040 975 910 845 780 715 650 585 520 455 390 325 260 195 130 65 0
Exploration carried 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Pre-tax income (EBT) 397.70406 361.3465 303.3688 281.36594 284.61594 287.86594 291.11594 294.36594 297.61594 300.86594 304.11594 307.36594 310.61594 313.86594 317.11594 320.36594 323.61594 326.86594 330.11594 333.36594
Tax @ 30% 119.311218 108.40395 91.01064 84.409782 85.384782 86.359782 87.334782 88.309782 89.284782 90.259782 91.234782 92.209782 93.184782 94.159782 95.134782 96.109782 97.084782 98.059782 99.034782 100.009782
Project Profit 278.392842 252.94255 212.35816 196.956158 199.231158 201.506158 203.781158 206.056158 208.331158 210.606158 212.881158 215.156158 217.431158 219.706158 221.981158 224.256158 226.531158 228.806158 231.081158 233.356158
Cashflow project -1444.444444 317.392842 291.94255 257.85816 242.456158 251.231158 253.506158 262.281158 264.556158 266.831158 269.106158 271.381158 273.656158 275.931158 278.206158 280.481158 282.756158 285.031158 287.306158 289.581158 291.856158
THE BOTTOM LINE
NPV @ 5% $1,870.69 NPV/SHARE FD 0.601990802
NPV @ 10% $801.54 NPV/SHARE FD 0.257938459
NPV @ 15% $233.60 NPV/SHARE FD 0.075173708
NPV @ 20% -$89.01 NPV/SHARE FD -0.028643251
CAPEX 1300
Debt 0.5 650
Equity 0.5 650
Mine Life 20
Interest rate on debt 10.00%
Assumed raising S.P 0.4
Depreciation p.a 65
Dilution 1625
# of current shares 1200