RBC MODEL tHIS IS FROM rbc JAN. 6TH 2012 USING $1200 GOLD
Our model
Our DCF model assumes US$200 million of capital to build a 1,000tpd underground mine and gravity recovery circuit starting in mid-
2013 (with +US$80 million already spent as of the end of third quarter 2011). Assuming mine grades starting around 20g/t gold (Au),
5g/t platinum (Pt), and 7.5g/t palladium (Pd), with recoveries of 94% for gold and 80% for Pt/Pd, we forecast annual production of
some 200Koz gold, 45Koz platinum, and 65Koz palladium. We assume operating costs of R455/tonne (US$260/tonne, including
US$200/t for mining, US$45/t for processing, and US$15/t for G&A). Using our long-term price forecasts of US$1,700/oz for
platinum and US$700/oz for palladium, our modeling suggests that by-product revenues could more than offset operating costs for the
mine, leaving negative cash costs for gold (roughly negative US$200/oz). At this point, our model assumes a PGM-rich concentrate is
produced and either sold as is or shipped offsite for further processing. Our model assumes a 2.1% government royalty and a fee
payment of R42/oz (roughly US$24/oz at current exchange rates) on all precious metal ounces (Au+Pt+Pd) to minority partner
COOMIGASP, and a 35% corporate tax rate. We assume life-of-mine gold reserves of 1.74MMoz (with 1.64MMoz of gold recovered
over a 9.5-year minelife).