Robust Kaunisvaara PEA?Hi, clarityplease
I don’t understand why you write ”I mean, they don't even tell us what iron price they are using in the study to get a reasonable IRR.”
There is a figure in the PEA named ”Product Pricing” illustrating the iron ore price in the periode 2009 – 2036 used in the calculation of DCF. But the DCF of USDm 393 in the PEA is calculated before deduction of the effects of taxation of net profits, which is a bit misleading. I don’t know if the net DCF would have been about USDm 250 if the company/consultants had incorporated taxes on net profits in their calculation.
I have modelled the Kaunisvaara project in my DCF-model. I find the choosen price curve over the next couple of decades as a realistic one (average of USDc 97 per dmtu on pellet feed; measured in the value of 2009-money). My base case DCF is USDm 250 (after tax). The estimated iron ore price for 2009 is USc 108 per dmtu, which is about 2/3 of the bench mark price of 2008. In my eyes the Kaunaisvaara project seems robust and economic viable.