RE: Korelin Economics Reprot - Roger Wiegand on XRThere has been some concern noted with the economics of the deposit and the associated cst of development:
Cerro Casale is the big gold project 75% owned by Barrick (ABX) and 25% owned by Kinross (K.to) (KGC). Yesterday Kinross published its 43-101 compliant technical report on the project. After a brief scan, here are a few line items:
Capex is put at a cool $4.184Bn
Base case ($800 gold and $2/lb copper) IRR comes in at a horrid 5.5%
IRR using U$960/oz gold and U$2.40/lb copper is still at meagre 9.9%
If you want to go with current spot prices as your base (a very dangerous hobby), then $1,200/oz gold and $2.80/lb copper gives you a 14.7% IRR...feeling lucky, punk?
The project is very opex-sensitive. Annual operating costs are slated at an impressively large $778m with the 43-101 model indicating a 10% rise in opex taking a third away from net cash flow.
People, don't hold your breath on a build decision for this thing. It might give Exeter (XRC.to) holders food for thought, too.
Looking for some counter arguments other than the age old gold to the moon discussion.
Regards
Ed