PROJECT STILL VERY PRIFIOFITABLEI have gone back and relooked at the feasibility study. Even with the weak diamond prices that we are getting right now which will correct itself sooner rather than later we are still profitable. At 90 dollars US which is a 40% reduction per carat. According to my calculations our IRR is reduced to 14.6 % excluding sunk cost and 3.9 % including sunk costs. I am basing this on the extract from the feasibility study below. What we really have here is a cash flow problem because the repayment schedule was too agressive for the current market conditions. The mine is very profitable and this will be resolved positively.
"The project provides a real rate of return to the partners of 32.6% and a real net present value (NPV) at 10% of C$1,004.8 M in calendar 2013 Canadian dollars, excluding all sunk costs to the end of 2013. In the scenario of including sunk costs incurred to end of 2013, the project provides a real rate of return of 21.9% and a real NPV at 10% of C$747.3 M. In the sunk cost excluded scenario, the project is most sensitive to changes in diamond prices, with real dollar returns decreasing the IRR by 4.5% for a 10% reduction in prices and increasing the IRR by 4.2% for a 10% increase in prices. The project shows a lesser sensitivity to capital with IRR figure changing by +3.1%/-2.7% for a ±10% change in capital. The sensitivity to operating cost is ±1.4% for a ±10% change in the operating costs."