NPV5

This is the 5th iteration of the NPV calculation.
It involves what is known, makes some assumptions and gives the reader some options to input themselves.

*Information in this current blog is based on information obtained up to mid 2018 and should be considered legacy at this time and should no longer be relied upon.*

What is known?

Inferred tonnage
CH-6 - 4.64 million tonnes @ 2.45 cpt
CH-7 -  4.99 million tonnes @ 0.85 cpt
Both (blended) = 9.63 million tonnes @ 1.62 cpt

Assumptions?

Valuations:
CH-6 - Base Case (adjusted to May 2016*) = CAD$207 per carat
CH-7 - Base Case (adjusted to May 2016*) = CAD$157 per carat
Both (blended) = CAD$181 per carat
* adjusted using the original valuation date and the Diamond index created by Paul Zimnisky.

Key Parameters:
Mill rate - 1 mtpa
Life of mine ~10 years
2017 - 2019 - $60 million in pre-construction costs (studies, geotechnical drilling, permitting, definition drilling, etc.)
2020 - Construction year - Main Capital cost
2021 - 1st year of full commercial production.

Tax Parameters:
Tax rate - 30%
Depreciation - Initial capital cost depreciated evenly over first 5 years of commercial production.
Tax credit - Initial tax credits (from exploration costs) of $150 million spread out over the 10 year mine life.

Blending:
For this NPV calculation, the assumption is that the 2 kimberlites will be fully blended.
In reality, the higher value CH-6 will be more weighted to the front of production and this will have a material impact on NPV and IRR.

What isn't known?

Capital cost** (CAD$) = ??
Operating cost** (CAD$/tonne) = ??
 ** There have been many opinions on what these figures might be and no general consensus. The PEA (preliminary economic assessment) will shed a more realistic figure for both of these categories.

NPV results?

Here is a scenario table where you can easily look up at the NPV based on the personal opinion of the reader. Just put in the capital cost and the operating cost and see where they meet to determine the after-tax NPV at a 5% discount.

Future?

PEA - The preliminary economic assessment is to be released by the end of June 2016 and will be a public report seen by a wide audience.