RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:What we need to doCorrect Sooner, you raise the issue that the NPV seems to be contrived as if it were coming from an entity partial to the buyer and not the seller and there will definitely have to be some serious negotiations to achieve a fair deal for all parties involved. Why use such a high discount rate? Why give $0 value for the back half of the mining life cash flows? Why use such conservative metal values when we are on the cusp of runaway inflation? Totally jaded and biased (i.e. worthless) NPV in my opinion!!
As to the exchange rate, remember at the height of the last bull market in 2011 where the CAD was worth more than the USD? We will soon be heading there again. Even recently, we were at 1 USD = 0.85 CAD. You can average somewhere between 1 and 0.85 if you wish, but 0.79 is too low my friend.
As to the share count, you have to utilize the non-RIO shares outstanding. Why would RIO pay themselves?! Left hand paying the right hand? That is a net zero sum. RIO will pay out based upon the shares they do not already own.
Calculation: 2.3 billion @ 0.90 = 2.07 billion @ 50% = 1.04 billion divided by 138 million shares = $7.50 a share. OK, so taking a bit off for the exchange rate yields a 25% premium over your $6 instead of a 50% premium. The point is that even using your logic, we are a good bit over $6. Seems you have to BUMP it up to at least $7, in your book that is. I will stick to my $15 - $20 range given basic trending over the next year. All bets are off if we break $3k gold within the next year.
If we are in an environment that is anywhere near $3k gold when negotiations get serious, the current NPV would be akin to grandpa walking into the car dealership and expecting to get his pickup truck at the same price he paid 40 years ago......not gonna happen!