Reasons for the difference in NPV between Glanvill Wolfry,
First of all, it isn't easy to do a direct correlation between the valuation report (prepared by Ross Glanville) and the NPV report from Tetra Tech Wardrop (Tetra Tech). Each report uses different factors and assumptions. For example, the Glanville report uses a 21 year mine life, a $375/mtu selling price, and a metalurigcal recovery rate of 70% (assumed based on historical rates and lack of other evidence to the contrary). The Glanville report did not follow National Instruments 43-101 standard. Compare that to the Tetra Tech assumptions including an 11.3 year mine life, ~ $400/mtu tungsten price, and an 85% tungsten recovery rate. Both options were discounted at 8%. Even with a low discount rate at 8%, the time value of money has a significant impact on the NPV after 10 years. Therefore, the higher MTU price and the higher tungsten recovery both offset the added mine life of the Glanville report. The result was an expectation that the Tetra Tech NPV would approximate the Glanville findings.
The basis for the remaining information in this post includes a review of documents WOF has provided to the general public as well as some direct information received from Woulfe management (most notably Mr. Brian Wesson). So without further adeiu, two reasons for the differences in the NPV as described by management were:
1) Overall conservatism in the Tetra Tech report; and
2) Underground vehicle costs (i.e. trucking) used base Canadian rates rather then those available in Korea.
1) Conservatism - The Tetra Tech report is one basis for the debt financing (which is yet to be announced). If Tetra Tech overstated the NPV, it could be subject to lawsuits from any users of including a bank. Therefore, this is a valid comment. However, on the same extent, Ross Glanville or PWC (a firm with which I am very familiar) would also be subject to legal litigation if they overstated the NPV.
2) The second example cited was the $33 /mtu operating cost for undergrond trucking. The view is that the competitive environment in Korea should result in a significantly lower cost. For example, the ability to contract these services would reduce the intital capital expenditures (capex) by $17 million and prevent the need for ongoing fleet replacement. Ongoing operating costs for undergound trucking may also be less then the $33/mtu as described in the BFS. Hopefully management is working to provide Tetra Tech with the necessary supporting documentation to allow for these updated assumptions to be included in an updated BFS in the near term.
Brian is a credible leader who has succeeded at bringing on another mine in the past. For someone such as himself to take the time for investors is both admirable and commendable. I am looking forward to management having a strong relationship with all investors on an ongoing basis.
While many good deliverables have been achieved, much is yet to do. I again refer back to comments by TechOne in terms of oustanding deliverables. I also hope that management focuses on how to acheive shareholder value. Ultimately, success isn't measured in how may tonnes are mined or how much W03 is produced. Success is measured by the annual returns generated. I sincerely hope management is working towards delivering these returns to shareholders in the near term.
Wolfry, I hope this answers your questions. Please don't hesitate to as if you have any additional questions.