RE:RE:New PEA will have complete resource updateThanks for pointing that out, EVH.
The 8 Mtpa scenario dates from Dec 2016. They have had nearly a year to drill additional resource, not just six months from the June resource update. So, there could be some surprises in store with the upcoming 12 Mtpa scenario. NPV will increase because of the increased throughput, but also because of additional high grade resource. The question is how much additional resource?
Comparing the Dec 2016 PEA with the June 2017 resource update:
Dec PEA: 33.6 billion lbs copper at the 3% cutoff (Table 14-15)
June Update: 38.4 billion lbs at 3% cutoff (Table 14-16)
So, higher grade copper did increase by 14%. It's possible that by the upcoming Nov update it may have improved an additional 14%. Maybe not, but it's a reasonable assumption. In that case overall high grade resource would increase by 25% to 30% in the 12 Mtpa mining scenario over the 8 Mtpa scenario in the Dec 2016 PEA. That is not all "Payable Metal" but everything being proportional, this should also improve to a similar degree.
No matter the outcome, NPV cannot add 100% to share price. This is because:
1) NPV starts with construction, not when you start to talk about construction. Remember, the whole point of NPV is the time value of money.
2) There is almost no infrastructure. This isn't some project a few kms off the TransCanada Highway.There is no rail transport so I'm assuming everything needs to be moved by truck over gravel roads, perhaps over long distances. This will act as a choke point on production. And the Company still needs to refurbish three hydroelectric plants. Until then, it's diesel generators.Just because you have a 12 Mtpa plan, doesn't mean it can be implemented correctly. For example, Ursus mentioned that Tenke Fungurume has been limited to 0.3 to 0.4 Mtpa production due to a lack of infrastructure. How many years will it realistically take for a 6+6 mining scenario to become reality? It not just a question of having a good story with a lot of positive numbers.
3) This is a PEA. It's preliminary. Prefeasibility and then feasibility are required to really nail down the numbers to within 90% accuracy.
For that reason, I'm applying 65% of NPV8 to a target price. I was going to use 60%, but decided that is a little too parsimonious. It recognizes the intrinsic value of the project, while still allowing additional time for project objectives to be realized.