FS backs NPV of $ 304m for Wetar copper project, Finders says
Monday, June 27 2011 - 03:23 AM WIB
Based on the BFS, the post‐tax, net present value (NPV) of the Wetar copper project is US$304 million.
Key financial metrics at various copper prices are set out below:
| ? | ? | Flat LOM Copper Price (US$/t) | ||||
| Price Case | Base1 | $6,000 | $6,000 | $7,000 | $8,000 | $9,000 |
| LOM Cash Surplus (US$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 |
Finders will use the BFS as the basis for negotiating financing for the project, and plans to finalise a mandate to lead arrangers for the project finance debt facility in July.
Other key findings of the BFS include:
? At current copper prices, project EBITDA for the first full year of production would exceed $160m ? a payback period on capital costs of less than 1 year.
? EBITDA Margins exceed 75% at full production and current copper prices.
? Life of mine copper production of 150,000 tonnes over a planned 9 year production period. Assuming that construction commences early in the fourth quarter this year, full production should be achieved by the end of 2013.
? Total capital costs for Stage 1 (the Expanded Demonstration Plant) and Stage 2 (the Main Plant) are expected to be $155m including an accuracy provision of $17m. The capital costs have increased from prior guidance as Finders has bought rather than leased a number of items of equipment and brought forward a number of previously deferred items including the Neutralisation Plant.
? Operating cash costs of $1.09/lb2. This result has been achieved despite a 40% increase in fuel prices by switching the project power to Marine Fuel Oil from diesel.
The study is based on a three stage ramp‐up to full production of 25,000 tpa copper cathode.
? The existing 1 825 tpa Demonstration 1,825 Plant will be restarted within 3 months of a Board decision to proceed.
? Production will expand to 7,000 tpa with commissioning of the Expanded Demonstration Plant approximately 10 months after commencement of construction activities.
? Full capacity of 25,000 tpa will be reached with re‐commissioning of the Whim Creek plant approximately 20 months after commencement of construction activities. Full production will be reached by the end of 2013.
Higher grades and recoveries achieved during the demonstration phase have the potential to add a full year?s production and $43m to the project NPV. Given the high operating margins the project is not overly sensitive to changes in operating or capital costs.
Finders Managing Director, Chris Farmer noted that the BFS followed the approvals last week of key mining permits on Wetar Island.
?We have recently achieved a number of key milestones in establishing Finders as one of the few listed copper companies with potential for near‐term production. This BFS indicates that the value of the Wetar Copper Project is significantly more than our current market capitalisation even though it excludes a number of significant potential upsides including improved grade and recoveries achieved during the demonstration phase and potential satellite deposits in the tenement areas.?
Finders will be providing further updates shortly regarding the progress of its project financing process, rezoning to excise the Project area from conversion forest classification as highlighted in the recent AGM and the planned project timetable. (romel)