Cashflow

Structure
Determine the Discounted Cash flow Rate of Return and Net Present Value at10% discount Rate, which
can be expected to be achieved from the mining of a copper-molybdenum ore body. The deposit is to be
mined by an integrated open-pit and flotation operation. The period of interest for the valuation exercise is
Jan 1, 2015 to Dec 31, 2020 and the following conditions of operation have been identified.
a. Unclaimed Exploration and Property Acquisition Cost, $10 m
b. Allowable capital write offs at January 1, 2015
On site plant, installed cost $40 m 5 years S.L
Open pit haulage trucks $ 5 m 5 years S.L
Product transportation facilities $ 5 m 5 years S.L.
Town site assets $70 m 5 years S.L.
c. Tax rate is 30% Royalty for Cu 4% while for Mo 4.5%.
d. Annual mill throughout 12,000,000 tonnes
e. Open Pit Stripping Ratio 2:1 = Waste : Ore (tonnage basis)
f. Operating Costs
Mining (2015) $0.60/t increasing at an annual compound rate of 10%
Milling (2015) $1.50/t increasing at an annual compound rate of 5%
g. Mill Head Grade 0.8% Cu, 0.1% Mo
h. Anticipated Metal Prices received by mine for concentrate shipped.
Contained Cu $750 per tonne in 2015 increasing at 5% per annum.
Contained Mo $5,000 per tonne in 2015 increasing at 3% per annum.
i. As at January 1, 2015 the operation carries a debt of $30 m at 10% compound interest charge. Loan
Principal replacement is $7.5 m per annum