Woulfe Mining Corp WFEMF

RE:RE:NPV

[74volfram]

Expanding on alta777's brief and precise message:
The mining plan is developed based on tungsten price, ore processing costs, ore grade and proven deposits, often by a specialized outfit with proprietary moidels.
The most basic and important parameter that comes out of the above conditions is the cut-off grade of the mine plan. At Sangdong, the original cutoff grade of 0.15% (good at 400 APT) is marginal with APT prices going below 300. The 0.40% cut-off can work down to 150 APT.
The cut-off grade determines how much ore is economically available for extraction.  The ore grade determines how much valuable material is in the available ore. The selected method of extraction and concentratoin determines CAPEX and OPEX of the mine.  at this point the NPV is determined by time discounting CAPEX, OPEX and sales at the prevailing commercial lending rate for the line of business (in this case 8%).
The NPV is useful to a company and a bank or an investor as the basis to negotiate a loan or investment.  For instance, the old mine plan of Woulfe had an NVP of 400+M calculated for $400 APT.  That and the off-take contract from IMC would have been sufficient to ask for a 200M commercial loan to start the mine. However, at $300 APT the NPV of the old mine plan becomes much smaller, which might have caused a denial of the commercial loan.  At $300 APT the new plan may even have a higher NPV (160M, including the IMC part) than the old plan.  The NPV will change with the price of tungsten or if the cost of operating the mine changes, or if new ore is added to the proven reserve.  For instance the addition of the hanginwall ore (coming up early next year) will significantly increase the NPV.  Also the progressive addition of the lower levels to the proven resources after dewatering will increase the NPV.  It is important that the NVP should be: 1) strongly positive; and 2) at least double the investment required to get the mine going. Once the mine starts it is up to management if they are good to increase the value of the company by progressively unlocking its resources.