RE:RE:RE:RE:Focus Ventures on Financial Post
There's a lot of things we don't know, but I think it's fair to say that Focus would want to reserve some portion of the deposit for DAPR (who knows how much) and then find a strategic partner/off-take agreement for the majority of the deposit. I suspect they'll be doing DAPR on a small to mid-sized scale, with the majority of the deposit fetching a lower price.
One also has to consider capex, along with the share dilution or percentage of the project they'll need to give up, in order to fund it. I doubt DAPR will pay for all the capex.
Also interested to see what the margins end up being in both scenarios.
Of note, Tim Oliver did a back-of-the-envelope calculation for FCV's NPV in March 2014 (before the first resource estimate and before the idea of DAPR came along), and he estimated the project would be worth $500 million PLUS, depending on various factors.
Here's what he had to say:
Project financials/economic model
I used available Vale Bayovar and other data to project economic performance of a Focus operation. The exercise assumes an identical concentrating process applied to a smaller operation. We know FCV’s concession is smaller than Vale’s. For this reason I will assume reserves and concentrate production at one half those of Vale. I use a standard Net Present Value model with inputs I feel are conservative, based on my judgment and experience. The results indicate that Bayovar could be a very robust and economic deposit, based on drilling that defines something in the order of a 195 million tonne resource. At a 12% discount rate, the operation would deliver a net present value (NPV) over US$500 million and an internal rate of return (IRR) north of 30%. Again, these numbers are solely based on my own economic model using my opinions and judgment, and incorporating what limited data is available.