Some Additional ThoughtsSpikearoo,
I don't see interest rates rising that high. There is so much global leveraged debt, this would lead to a Depression. Central banks did not save the global economy through easy money, just to throw it all away. But you are correct higher interest rates would justify a higher discount. Why buy risky mining stocks at a 6% discount, if you can purchase government bonds yielding 6% or higher? That's why the Company provides a table, multiple tables actually, in the Economic Analysis. It makes it simple for investors to consider different scenarios, including a base case scenario of NPV8, which tends to be slightly conservative. There is no one right answer. The correct discount rate to apply can change month to month, year to year. Right now, I consider commodity price risk low. So, in my personal opinion, at $3 copper a discount of 6% is justified. A year ago copper was $2.50 to $2.75. So, at $3 copper a higher discount of 8% would have been more reasonable.
Tops,
You're right that if metals were to suddenly become scarce for a couple of years, then using a high copper price of $4 to $5 would send valuations through the roof. At that point you could cash out, realizing incredible capital gains. It wouldn't last, but who cares if you can realize 20, 30, or $40 share? I wouldn't count on that happening. Everyone has their own opinion on this.
There are natural forces that rein in such periods of exuberance. Cobalt is a case in point. There doesn't have to be a green revolution. Consumers can keep driving their gas guzzlers until electric vehicles become price competitive. I don't know anyone who cares much one way or the other. On Canadian roads electric vehicles are rare. It's a revolution that will only happen if consumers can afford it.
The increased metal prices in 2011 were a result of massive Chinese infrastructure spending to kickstart their economy in the wake of the 2008 global meltdown. That's long over. As well, governments like Congo increase royalties, add super taxes, and reduce stability agreements to ensure that they, not shareholders, benefit from any increased metals prices.
What I like about IVN is they don't need super high metals prices to succeed. All projects are high grade, and will earn plenty of money at current pricing that could easily justify $10 share...if the Kabila government stops trying to rake in all profits for themselves. I'm not betting Kabila will see the light. Just the opposite, I'm anticipating he'll turn the screws. Luckily IVN has not yet started construction on either Kipushi or K-K. They have not heavily invested in rail and power infrastructure either. In other words, they are not subject to the same sunk costs trap as so many others. They can continue working through feasibility with a minimum of expense, until the political climate becomes less hostile to miners. The upcoming election in Congo will be the best chance for reform. If they must, production can be limited to 4 Mtpa, or even less, until which time political winds blow in the Company's favour.