Net Present Value Discounted 5% For Biox @$1800 A few days ago I provided cash flow analyses for the Sulphide resources using Biox at POG of $1800 US rather than $1300 used in the 2019 Feasability study.
I just went back to those calculations and estimated its NPV5 ....Net Present Value of Cash flows discounted by 5%.... for the 6 year mine life @$1800 POG
The result was that the NPV5 increased to $125 million US with an IRR of 64 %.
At $1300 POG, the NPV5 was just $27.5 million US
That is a huge difference but not surprising given the sensitivity to POG.
I then computed the NPV5 for just the Floatation Production of Sulphide concentrate under the same assumptions.
That NPV5 was $98 million US .
The extra capital cost of BIOX was $32.5 million US.....versus just $27 million in added NPV5
In other words , these calculations show that it would not be worth installing BIOX unless the sulphide mine life was longer than 6 years.
This means that substantially more sulphide resources must be delineated at Selinsing in order to proceed to phase 2 of the current capital expenditures.
We already know about 150,000 ounces Inferred and almost surely each pit has its basement lode.
That requires underground mining unless a super pit is possible.
But, the rule of thumb for UG mining is that grades must be at least twice that of open pit , as mining costs double.
Selinsing open pit grades averaged about 1.75 gms per ton, So you would need at least 3.5 gms for the basement lode.
So, those of you who might have the fortitude to remain a shareholder in several years hence....and that won't include me..you might keep these calculations in mind should management decide to install BIOX without already having delineating 4 or 5 more years of Sulphide resources.
Hands up those who will be staying that long...LOL