RE:RE:RE:RE:RE:Looking for High GradeThank you. That is a lot more clear now and I think I see where you might be going wrong.
First off, I would be happy with a 0% increase in payable metal when increasing the Mtpa of the mine. The only way the total payable metal would increase in an increased Mtpa scenario is if the associated increase in marginal revenue per tonne allows IVN to use a lower cutoff for the resource estimation. I am not banking on that at all and I don't understand why you would either, since your stated position is that the grades are already too low for your liking.
At this point, it appears that you are conflating total mineral resource (expressed as total payable metal) with the mining rate. At a fixed copper grade cutoff, increasing from a 4 Mtpa to a 6 Mtpa mine only increases the rate of extraction of the payable metal (therefore increasing cashflow and NPV). It will not affect the amount of the resource at all. A simple analogy is a pail of ice cream (the defined resource of payable metal). Dishing it out (mining it) with a icecream scoop vs a teaspoon does not increase the amount of ice cream, it just affects how quickly the pail (mine) is emptied of ice cream (payable metal).
That being said, I believe you will see an increase in total payable metal, but that will be from expansion of the resource by drilling.
btw, I've seen your variations of the following quote of yours a few times now and you should probably explain what you mean by "simply math". It looks like you are implying that IVN is imflating numbers by manipulating the numbers. Is that the case? If so, just come and say it directly so we can debate on it. If not, please take the time to figure out what you are actually trying to say instead of being so vague.
bloomfield: "NPV must automatically go up, since throughput in the new theoretical scenario increases by 50%, from 8 to 12 Mtpa. But how much of this is due to an increase in Payable Metal? And how much is simply math" My position is "Bring on more simply math". I am a big proponent of simple math and understand how ecomomies of scale works. For instance, all else being equal, if we increase from 8Mtpa to 12 Mtpa, I can quickly calculate that the yearly earnings of the mine will increase by roughly 50% (without any increase in total payable metal over the life of mine), therefore the relevent portion of IVN share price will also increase by some factor close to that 50% since typically share price is some function of earnings in a producing mine. That makes it easy to make an investment decision.
Your fear is causing you to miss the big picture here. Quit nitpicking on the small details and step back to see the whole picture. You are like a CEO doing forensic accounting instead of bringing new products to market. While you are worrying about the details of office supply costs, you will miss the next big sales opportunity.
bloomfield18 wrote: Going Deeper,
I should have been more specific. I'm literally referring to cash money paid for copper, not resource statistics. You'll find this in the 8 Mtpa mining scenario. Looking at the June resource update (Table 24-12, page 489, Mining Production Statistics), you'll find the heading "Payable Metal" in millions of lbs. If you add up all the years, it comes to just over 16 billion lbs combined Kamoa and Kakula for the entire life of mine.
You can also see this in Table 24-18, page 495, Processing Production Schedule. Under the heading "Total Recovered Metal", this is 16.052 billion lbs for the life of mine. This is for the entire project, Kamoa and Kakula combined.
In the 6+6 scenario, I'm looking to how much this value increases. That will provide the percentage increase in actual ORE. You don't get paid for resource, only that portion of the resource which makes head grade cut as mill feed.
NPV must automatically go up, since throughput in the new theoretical scenario increases by 50%, from 8 to 12 Mtpa. But how much of this is due to an increase in Payable Metal? And how much is simply math. An increase in Payable Metal is real and permanent. Anything else is a result of mathematical modelling and subject to change.
It's not that NPV doesn't matter. But how you arrive at the bottom line is even more important. You can change your model any time, scaling production up or down in response to real world mining conditions.You can't change Payable Metal.
A good substitute for Payable Metal is undiscounted cash flow, which was $17.114 billion for $3 copper in the 8 Mtpa mining scenario. The amount undiscounted cash flow increases in the 12 Mtpa scenario is directly proportional to any increase in Payable Metal. This should be available in the news release.
The 12 Mtpa scenario is only valid if it is possible under real world conditions in the Congo. It might take years to achieve that level of production. Ursus mentioned Tenke Fungurume has been limited to 0.3 or 0.4 Mtpa due to a severe lack of infrastructure. I haven't checked this out, but will take his word for it. That's why at this early stage in the project, I'm more interested in any increase in Payable Metal. A 25 to 30% increase from the Nov 2016 PEA would be very positive for shareholders. 50% would be fantastic.