What the valuation increase doesIn today's press release from Shore Gold, there was a 19% increase in diamond values. In Shore's Feb 10th press release, they presented what a 20% increase would do to the project economics - here are the relevant points;
- With a 20 percent increase in diamond prices compared to March 2008, as is currently indicated in the diamond market, the NPV (using a 7 percent discount rate) increases to $2.1 Billion for an IRR of 20 percent before taxes and royalties and the after-taxes and royalties NPV increases to $1.3 billion with an IRR of 17 percent (see discussion below under "Star – Orion South Prefeasibility Study Results");
- Pre-production capital cost of $1.6 billion with a total capital cost of $2.5 billion (including direct and indirect costs) over the LOM and an initial capital cost payback period of 4.6 years. With a current 20 percent increase in diamond prices compared to March 2008, the payback period is reduced to 3.5 years;
They will be finalising/formalising these numbers in the final feasibility report, which is still expected for Q1 2011.