RE:RE:RE:RE:RE:RE:RE:RE:no 3dIP results = Bad news?rbarbarick wrote:
On Dec 3 he wrote that his back of the envelope NPV calculations should not be used without the many cautions that he explains. In other words it's a WAG. I eccept that the scale of the guess is worth noting for the big picture. From the NPV people can make further assumptions and estimate buyout values.
The NPV is discussed in his 9/18/2019 Report: Oroco Resource Corp — Advancing a giant copper porphyry project
Rbarbarick, thanks for your post, it is a reminder of the type of quality & detail that are in the Ceasers reports, I have seen this before but it s well worth a review,,.
A couple of paragraphs that jump right out of the 9/18/2019 report are as follows,,.
Bigger isn’t always better and the era when supersized projects with high NPVs were prioritized over IRRs is over. The focus in the past few years has shifted on the return on investment and shorter payback periods and higher IRRs are favored over high NPVs. But there are some exceptions. If a junior company would like to build a mine, it will have to convince its financiers that it will effectively be able to repay the borrowed money as fast as possible. But in some cases the projects are so large it’s unthinkable a junior exploration company will be able to develop the assets themselves, but they are attractive to majors as they are capable of generating annual revenues of several hundred million dollars or more for several decades, carrying miners over numerous price cycles. These are the Tier One assets of the world’s largest mining companies, and copper is and will remain a metal that is the backbone of major mining companies.
Oroco’s Santo Tomas project falls into that category. It’s almost unthinkable this asset will not end up with a BHP, Grupo Mexico or Chinese conglomerate as it will very likely be too large for Oroco to even consider developing themselves. Ideally, the asset would find a ‘middle way’ between a high NPV (and long mine life) and a relatively high IRR signifying a moderate payback period. And as explained in the previous paragraph, because of the existence of a higher-grade core, Santo Tomas actually does offer that optionality as it looks like the initial higher grade shell will boost the IRR and payback period while the lower grade zones will provide additional flexibility: when the copper price is high, the future operator of the project may decide to mill some of the lower grade rock as well.