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Ivanhoe Mines Ltd T.IVN

Alternate Symbol(s):  IVPAF

Ivanhoe Mines Ltd. is a Canada-based mining, development, and exploration company. The Company is focused on the mining, development and exploration of minerals and precious metals from its property interests located primarily in Africa. Its projects include The Kamoa-Kakula Copper Complex, The Kipushi Project, The Platreef Project., and The Western Foreland Exploration Project. The Kamoa-Kakula Copper Complex project stratiform copper deposit with adjacent prospective exploration areas within the Central African Copperbelt, approximately 25 kilometers (km) west of the town of Kolwezi and about 270 km west of the provincial capital of Lubumbashi. The Kipushi mine is adjacent to the town of Kipushi in the Democratic Republic of the Congo (DRC) approximately 30 km southwest of the provincial capital of Lubumbashi. The 21 licenses in the Western Foreland cover a combined area of 1,808 square kilometers to the north, south and west of the Kamoa-Kakula Copper Complex.


TSX:IVN - Post by User

Bullboard Posts
Comment by bloomfield18on Feb 19, 2019 1:07pm
170 Views
Post# 29383244

RE:EBITDuh

RE:EBITDuhCarbide,

You are substantially understating values. For example, the latest 18 Mtpa PEA for Kamoa may not yet be available, but we do have the 12 Mtpa PEA from Jan 2018. Using a $3 lb base case copper price assumption, please view Figure 24.15, p 510. The black line indicates cumulative cash flow AFTER TAX. After 22 years production that comes to $20 billion. So average AFTER TAX cash flow over 22 years is US$900 million/year. The 39.6% share for IVN is worth US$356 million/year. It will be higher for an 18Mtpa mine. How much higher, we’ll find out when the latest technical report is posted on Sedar. They have up to 45 days from the news release. 

EBITDA is before interest expense is considered, and even more relevant to investors, BEFORE taxes. Investors usually want to see AFTER TAX values. Using EBITDA we can see from Table 24.14, the value is approximately 50% higher. 

The Company has detailed after tax tables at different metal price assumptions and discount rates in every single technical report. These often go on for 30 pages or so under the heading Economic Analysis. There is no point reinventing rubber with these back of the napkin calculations, when everything is already neatly summarized by professional engineers. You do that kind of stuff, when technical reports are unavailable, or you have reason to believe the technical report is invalid. 

Platreef base case in the September 2017 Feasibility shows US$ 6.47 billion AFTER TAX cash flow for the life of mine. This is 4 Mpta. They could easily triple this to 12 Mtpa. Then you’re looking at 64% of just under US $20 billion. Reserves in feasibility way understate total resource. At the 3 g/t cutoff they’re looking at 55 million oz in PGMs, plus gold and copper as accessory metals. Don’t take a big story and dress it up as a little kid. These projects start small, but that’s not where they’re ultimately headed. Massive high grade projects are extremely rare these days.

I don’t feel like going back to look at Kipushi. They had strong numbers using base case scenarios. Anyone can find this under Cumulative Cashflow After Tax in  the Economic Analysis section of every technical report from the Company. You don’t need to be an accountant to read a simple graph. If and when metals prices rise above base case, profits increase exponentially, because production costs usually rise more slowly and the original CapEx is akready a sunk cost. So, when palladium hits $1460 ounce, which no one saw coming by the way, it has a major impact on the bottom line. You can see this in today’s news release.


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