RE:RE:macaw: Further to my earlier commentsNPV over the long term is a useless measure. Everyone knows it, even though they are forced to go through the motions.
The only way around this is to run the model with escalating numbers for every input, except capital which is already recovered after a few years. And that approach is fraught with more assumptions and other BS that it is worth.
This is why the ore grade required to build a mine is greater than the ore grade require to keep an older project in operation.
macaw wrote: Even after 24 yrs, the 2013 mine life, the dicount factor applied to net cashflow is about .1 (10 cents on the dollar) and drops to .02 (or 2 cents on the dollar) after 40 yrs (using a 10% discount rate). So any increase in total tonnage doesn't add much to the NPV. In my view they should be trying to maximize tonnage per year since this property is open in more tan one direction plus they have other properties that could turn out to be hugh as well.
AlternativeView wrote: I just spent the morning reviewing the data and a key point is that the two pit outlines in the graphic do not have the same basis. The old outline is the "2013 PEA Ultimate", while the newer outline is the "2018 Resource Pit"
The point to be made is that the old PEA pit was further constrained by pessimistic assumptions for recovery, payability, etc. This reduced the ore volume from about 2B tonnes down to about 1B tonnes, minable.
Eliminating Cliff's pessimistic assumtions and using more realistic assumptions based on recent metalurgy and customer indicated payability will greatly increase the volume of minable ore.
This in turn will boost mine life from the current 24 years, possibly to 40 years at 114,000 TPD. And that does not include future good results at Van.
The conclusion is therefore that any suggestion of reducing LOM throughput to save on capital costs is ridiculous, unless you want to calculate an NPV over 50 - 100 years. What they might be considering is a large operation, but with a staged build-out.