TSXV:AAA.P - Post by User
Post by
JR__Ewingon Nov 09, 2013 10:49am
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Post# 21891322
Price of potash and IRR
Price of potash and IRRThe IRR after tax of Allana is estimated in the feasbility study at
- 33% with the price of potash at $430
- 28.83% with the price of potash at $387 (Product Price Drop by 10 %)
- 25.4% with the price of potash at $344 (Product Price Drop by 20 %)
At $344 (or IRR at 25.4%) , the FS states "indicating that the project will be able to serve its debts at all times in any of these scenarios and even with higher associated risks." (p.194 of the FS).
SHould the price of potash be at $300 when Allana hit production in 2 years, all things be equal, the IRR of Allana would probably be in the range of 18-20%, which ramains very good and higher than the current IRR of other greenfield projects using the price of potash at $450.
P.S. This FS was completed before the recent changes (to be introduced) to the mining income taxes which will likely be reduced from 35% to 25%.