Key financial assumptions used in the financial analysis
- Copper price for the base case used the Comex forward curve as at 16 June 2011 and then assumed a reversion to a real long-term price of $2.50/lb by 2017.
- Discount rate 10% (approximates Company's weighted average cost of capital,WACC);
- IDR/USD exchange rate 8,500;
- Diesel fuel price US$1.13/litre, MFO fuel price US$1.01/litre;
- Total power cost US$0.226/kWh.
- Tax rate of 25%, royalty rate of 4%.
Key financial ratios
The project is robust at a number of copper price scenarios with short payback periods, strong cash generation and significant NPV10 across a range of copper prices. NPV on an ungeared basis varies ~$70m for every $1,000 change in the copper price.
| Flat LOM Copper Price ($/t) | |||||||
|---|---|---|---|---|---|---|---|
| Price | Case Base | $6,000 | $7,000 | $8,000 | $9,000 | $10,000 | |
| LOM Cash Surplus (US$m) | 525 | 295 | 408 | 518 | 627 | 737 | |
| Project NPV10 (US$m) | 304 | 143 | 216 | 287 | 359 | 430 | |
| Project IRR | 62% | 32% | 42% | 51% | 60% | 69% | |
| Payback Period (Years) | 0.9 | 1.6 | 1.3 | 1.1 | 0.9 | 0.8 | |
The annual EBITDA for the project at capacity production above a $7,000/t copper price equals Finders' current market capitalisation.
