RE: Reserve evaluation update coming From IDOP March 2012, Principal Assumptions page 24:
"Metal prices used for the analysis are copper $2.90/lb ($2.85/lb long-term), gold
$1,272/oz ($1,200/oz long-term) and silver $17.41/oz ($16.60/oz long-term)."
I don't think we can assume spot price returns at any time as the concentrates may be sold in whole or part on long-term contracts using prices above or below spot. But of course higher prices for the long term proving the assumptions too conservative are a good thing, even if spot prices aren't realised.
The real drivers should be grades and net smelter returns - how cheaply can they mine, how much high grade ore can they hoist from underground and how soon. TRQ has said they expect grades from Hugo North underground to be 4X those from the pit. In mining the money is made surviving the market gluts by being the cheap producer, and cashing-in during market shortfalls by being one of the last mines standing - or coming in early as it appears will be the case now. Northern Dynasty ...
Price of coal/electricity and gas probably the big cost-side drivers - not cheap to get supplies, people and parts in and out of OT.
There is always some uncertainty in commissioning a new mine about whether the mine plan works, how efficient the concentrator is, how well the concentrate smelts, whether there are problematic metelurgy issues, the engineering of the large moving parts like the hoists and conveyors, ball and SAG mills, flotation cells etc.,. And for a block cave, the fracturing behavior of the rock, stability of the pillars and mine design - it is complicated stuff rife with uncertainty. But sure looks like it will be a big winner once they have two hoists going flat out at HN and HNE with some of the most promising ore in the world feeding the mill.
Been a long up and down road since Bobby hit paydirt with OTD-150 in July, 2001. You could have made or lost several fortunes just playing the rollercoaster ride IVN/TRQ has been on in the 12 years since. Look at other horses out of the gate, especially Pebble ... hung up on regulatory barbed wire and nowhere near production - maybe Teck was pretty smart to dump it as they did, although it could still be a big winner. Schaft Creek another turtle ... the next few years could be pretty good for OT if production can ramp up and the old mainstays like Grasberg and Escondida continue to face declining grades and other challenges in maintaining production. Oh, and the economy around the world doesn't implode, but manages some net growth and stability.
cg