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DISCOUNT RATE PARAMETERS

Variable
Annual Risk-free Rate
Long-term Inflation
Tax Rate
Nominal Cost of Debt
Risk Premium

7.02%
2.60%
30.00%
7.65%
7.50%

Debt
Nominal Cost of Debt
Debt (millions)
MV of Firm (millions)
Tax Rate
Cost of Debt
Firm Value

WACC CALCULATION
Equity
7.65% Risk Free Rate
2205 Beta
15535 Risk Premium
30% Cost of Equity
5.36%
17740

7.02%
0.53
7.50%
11%
WACC:

10.29%

Mine life
Payable copper
payable zinc
operating costs
copper treatment charge
zinc treatment charge

14
339
168
138
0.28
0.22

capital cost
1988
1999
2000

55
255
292

1996
1997

6
18
45
30%
1.5%
25%
20%

Feasibility study

Closure costs
tax rate
Sustaining capex
working capital
capital allowances

Revenues
Amount of copper (Millions lbs)
Price of copper (USD/lb)
Revenues from copper (Millions USD)
Amount of zinc (Millions lbs)
Price of zinc (USD/lb)
Revenues from Zinc (Millions USD)
Total Gross Revenues
Treatment Costs
Copper treatment costs (Millions USD)
Zinc treatment costs (Millions USD)
Total Net Revenues
Annual Operating Costs (Millions USD)
Pretax Profits (Millions USD)
Capital Expenditures
Feasibility (Millions USD)
Capital expenditures (Millions USD)
Depreciation
EBIAT

Taxes
PAT
Adjustments:
Depreciation
Total working capital
Change in working capital
Capital expenditures
Closure costs
Free Cash Flow (Millions USD)
NPV (million$)

Years
Millions of lbs
Millions of lbs
1996$ p.a.
$/lb payable cu
$/lb payable zinc

Inflation

1996 millions
1996 millions
1996 millions
1996 millions
1996 millions
1996 millions
p.a. of initial capex
of net revenue (gross revenue - treatment charges)
straight line for all capital
1996

1997

18.47

1998

1999

57.90

275.41

6.00

18.47

57.90

275.41

-6.00

-18.47

-57.90

-275.41

393

2.60%

2000

323.57

1
2001

2
2002

3
2003

4
2004

5
2005

339

###

339

###

339

0.74
250

0.77
260

0.80
271

0.83
282

0.87
294

168

168

168

168

168

0.46
78
328

0.50
85
345

0.55
92
363

0.60
100
383

0.65
109
403

107.92
42.02
177.67

110.72
43.11
191.09

113.60
44.23
205.44

116.56
45.38
220.81

119.59
46.56
237.26

156.90
170.71

160.98
183.95

165.16
198.12

169.46
213.30

173.86
229.55

9.85
133.35
37.37

10.11
135.37
48.58

10.37
137.44
60.68

10.64
139.57
73.72

10.92
141.76
87.80

11.21
26.16

14.57
34.01

18.20
42.47

22.12
51.61

26.34
61.46

323.57

133.35
44.42
44.42
9.85

135.37
47.77
3.35
10.11

137.44
51.36
3.59
10.37

139.57
55.20
3.84
10.64

141.76
59.32
4.11
10.92

-323.57

105.23

155.91

165.96

176.69

188.18

6
2006

7
2007

8
2008

9
2009

10
2010

11
2011

339

###

339

###

339

###

0.90
307

0.94
319

0.98
333

1.02
347

1.07
361

1.11
376

168

168

168

168

168

168

0.71
119
425

0.77
129
449

0.84
141
473

0.91
153
500

0.99
167
528

1.08
181
558

122.70
47.78
254.88

125.89
49.02
273.74

129.16
50.29
293.96

132.52
51.60
315.61

135.96
52.94
338.83

139.50
54.32
363.71

178.38
246.97

183.02
265.63

187.78
285.63

192.66
307.07

197.67
330.06

202.81
354.72

11.20
10.65
236.32

11.49
10.93
254.70

11.79
11.21
274.42

12.10
11.50
295.57

12.41
11.80
318.26

12.74
12.11
342.61

70.90
165.42

76.41
178.29

82.33
192.09

88.67
206.90

95.48
222.78

102.78
239.83

10.65
63.72
4.40
11.20

10.93
68.44
4.72
11.49

11.21
73.49
5.05
11.79

11.50
78.90
5.41
12.10

11.80
84.71
5.80
12.41

12.11
90.93
6.22
12.74

160.46

173.01

186.46

200.89

216.37

232.98

12
2012

13
2013

14
2014

339

###

339

1.16
392

1.20
408

1.26
426

168

168

168

1.17
197
589

1.28
215
623

1.39
234
659

143.13
55.73
390.40

146.85
57.18
419.02

150.66
58.67
449.72

208.08
381.17

213.49
409.55

219.04
440.01

13.07
12.42
368.75

13.41
12.74
396.80

13.76
13.01
427.00

110.62
258.12

119.04
277.76

128.10
298.90

12.42
97.60
6.67
13.07

12.74
104.75
7.16
13.41

13.01
112.43
7.68
13.76

250.80

269.94

290.48

Opening Balance
Additions
Total
Dep
Dep1
Dep2
Dep3
Dep4
Dep5
Dep6
Dep7
Dep8
Dep9
Dep10
Dep11
Dep12
Dep13
Dep14

1
656.88
9.85

10.11

10.37

10.64

131.3764 131.3764 131.3764 131.3764


1.970645 1.970645 1.970645 1.970645
2.021882 2.021882 2.021882
2.07
2.07
2.13

133.347 135.3689 137.4433 139.5717

10

11

12

10.92

11.20

11.49

11.79

12.10

12.41

12.74

13.07

131.3764
1.970645
2.021882 2.021882
2.07
2.07
2.13
2.13
2.18
2.18
2.24

2.07
2.13
2.18
2.24
2.30

2.13
2.18
2.24
2.30
2.36

2.18
2.24
2.30
2.36
2.42

2.24
2.30
2.36
2.42
2.48

2.30
2.36
2.42
2.48
2.55

2.36
2.42
2.48
2.55
2.61

141.7555 10.64895 10.92582 11.20989 11.50135 11.80038 12.10719 12.42198

13

14

13.41

13.76

2.42
2.48
2.55
2.61
2.68
12.74495

2.48
2.55
2.61
2.68
2.68
13.0066

Opening Balance
Additions
Total
Dep
Dep1
Dep2
Dep3
Dep4
Dep5
Dep6
Dep7
Dep8
Dep9
Dep10
Dep11
Dep12
Dep13
Dep14
Dep15
Dep16
Dep17
Dep18

1
678.79
10.18

10.45

10.72

135.7583 135.7583 135.7583


2.036375 2.036375 2.036375
2.089321 2.089321
2.14

137.7947

139.884 142.0277

10

11

11.00

11.28

11.58

11.88

12.19

12.50

12.83

13.16

135.7583 135.7583
2.036375 2.036375
2.089321 2.089321 2.089321
2.14
2.14
2.14
2.20
2.20
2.20
2.26
2.26
2.32

2.14
2.20
2.26
2.32
2.38

2.20
2.26
2.32
2.38
2.44

2.26
2.32
2.38
2.44
2.50

2.32
2.38
2.44
2.50
2.57

2.38
2.44
2.50
2.57
2.63

144.227 146.4836 11.00413 11.29024 11.58379 11.88497 12.19398 12.51102

12

13

14

15

16

17

18

13.50

13.85

14.21

14.58

14.96

15.35

15.75

2.44
2.50
2.57
2.63
2.70

2.50
2.57
2.63
2.70
2.77

2.57
2.63
2.70
2.77
2.84

12.83631 13.17005 13.51247

2.63
2.70
2.77
2.84
2.92

2.70
2.77
2.84
2.92
2.99

2.77
2.84
2.92
2.99
3.07

2.84
2.92
2.99
3.07
3.15

13.8638 14.22425 14.59408 14.97353

Mine life
Payable copper
payable zinc
operating costs
copper treatment charge
zinc treatment charge

12
313
155
131
0.28
0.22

capital cost
1988
1999
2000

55
246
281

1996
1997

6
18
45
30%
1.5%
25%
20%

Feasibility study

Closure costs
tax rate
Sustaining capex
working capital
capital allowances

Revenues
Amount of copper (Millions lbs)
Price of copper (USD/lb)
Revenues from copper (Millions USD)
Amount of zinc (Millions lbs)
Price of zinc (USD/lb)
Revenues from Zinc (Millions USD)
Total Gross Revenues
Treatment Costs
Copper treatment costs (Millions USD)
Zinc treatment costs (Millions USD)
Total Net Revenues
Annual Operating Costs (Millions USD)
Pretax Profits (Millions USD)
Capital Expenditures
Feasibility (Millions USD)
Capital expenditures (Millions USD)
Depreciation
EBIAT

Taxes
PAT
Adjustments:
Depreciation
Total working capital
Change in working capital
Capital expenditures
Closure costs
Free Cash Flow (Millions USD)
NPV (million$)

Years
Millions of lbs
Millions of lbs
1996$ p.a.
$/lb payable cu
$/lb payable zinc

Inflation

1996 millions
1996 millions
1996 millions
1996 millions
1996 millions
1996 millions
p.a. of initial capex
of net revenue (gross revenue - treatment charges)
straight line for all capital
1996

1997

18.47

1998

1999

57.90

265.69

6.00

18.47

57.90

265.69

-6.00

-18.47

-57.90

-265.69

236

2.60%

2000

311.38

1
2001

2
2002

3
2003

4
2004

5
2005

313

###

313

###

313

0.74
231

0.77
240

0.80
250

0.83
261

0.87
272

155

155

155

155

155

0.46
72
302

0.50
78
318

0.55
85
335

0.60
93
353

0.65
101
372

99.64
38.77
164.02

102.23
39.78
176.40

104.89
40.81
189.65

107.62
41.87
203.84

110.42
42.96
219.02

148.94
153.49

152.81
165.60

156.78
178.57

160.86
192.47

165.04
207.35

9.52
128.90
24.59

9.77
130.85
34.75

10.03
132.86
45.71

10.29
134.92
57.55

10.55
137.03
70.33

7.38
17.22

10.42
24.32

13.71
32.00

17.26
40.28

21.10
49.23

311.38

128.90
41.01
41.01
9.52

130.85
44.10
3.10
9.77

132.86
47.41
3.31
10.03

134.92
50.96
3.55
10.29

137.03
54.76
3.80
10.55

-311.38

95.58

142.31

151.52

161.37

171.91

6
2006

7
2007

8
2008

9
2009

10
2010

11
2011

313

###

313

###

313

###

0.90
283

0.94
295

0.98
307

1.02
320

1.07
333

1.11
347

155

155

155

155

155

155

0.71
110
393

0.77
119
414

0.84
130
437

0.91
141
461

0.99
154
487

1.08
167
515

113.29
44.08
235.28

116.23
45.22
252.69

119.25
46.40
271.35

122.35
47.61
291.34

125.54
48.84
312.76

128.80
50.11
335.73

169.33
223.31

173.74
240.41

178.25
258.75

182.89
278.41

187.64
299.50

192.52
322.12

10.83
10.29
213.02

11.11
10.56
229.85

11.40
10.84
247.91

11.70
11.12
267.29

12.00
11.41
288.09

12.31
11.70
310.42

63.90
149.11

68.96
160.90

74.37
173.54

80.19
187.10

86.43
201.66

93.13
217.29

10.29
58.82
4.06
10.83

10.56
63.17
4.35
11.11

10.84
67.84
4.66
11.40

11.12
72.83
5.00
11.70

11.41
78.19
5.36
12.00

11.70
83.93
5.74
12.31

144.51

155.99

168.31

181.53

195.71

210.94

12
2012
313

1.16
362
155

1.17
182
544

132.15
51.42
360.36
197.53
346.39

12.63
12.01
334.39

100.32
234.07

12.01
90.09
6.16
12.63
227.29

Opening Balance
Additions
Total
Dep
Dep1
Dep2
Dep3
Dep4
Dep5
Dep6
Dep7
Dep8
Dep9
Dep10
Dep11
Dep12

1
634.97
9.52

9.77

10.03

10.29

126.9944 126.9944 126.9944 126.9944


1.904916 1.904916 1.904916 1.904916
1.954444 1.954444 1.954444
2.01
2.01
2.06

128.8993 130.8538

132.859 134.9164

10

11

12

10.55

10.83

11.11

11.40

11.70

12.00

12.31

12.63

126.9944
1.904916
1.954444 1.954444
2.01
2.01
2.06
2.06
2.11
2.11
2.17

137.0273 10.29376

2.01
2.06
2.11
2.17
2.22

2.06
2.11
2.17
2.22
2.28

2.11
2.17
2.22
2.28
2.34

2.17
2.22
2.28
2.34
2.40

2.22
2.28
2.34
2.40
2.46

2.28
2.34
2.40
2.46
2.53
10.5614 10.83599 11.11773 11.40679 11.70337 12.00765

Mine life
Payable copper
payable zinc
operating costs
copper treatment charge
zinc treatment charge

18 Years
365 Millions of lbs
181 Millions of lbs
145 1996$ p.a.
0.28 $/lb payable cu
0.22 $/lb payable zinc

capital cost
1988
1999
2000

55 1996 millions
264 1996 millions
303 1996 millions

Feasibility study
1996
1997
Closure costs
tax rate
Sustaining capex
working capital
capital allowances

6 1996 millions
18 1996 millions
45 1996 millions
30%
1.5% p.a. of initial capex
25% of net revenue (gross revenue - treatment charges)
20% straight line for all capital
1996

Revenues
Amount of copper (Millions lbs)
Price of copper (USD/lb)
Revenues from copper (Millions USD)
Amount of zinc (Millions lbs)
Price of zinc (USD/lb)
Revenues from Zinc (Millions USD)
Total Gross Revenues
Treatment Costs
Copper treatment costs (Millions USD)
Zinc treatment costs (Millions USD)
Total Net Revenues
Annual Operating Costs (Millions USD)
Pretax Profits (Millions USD)
Capital Expenditures
Feasibility (Millions USD)
Capital expenditures (Millions USD)
Depreciation
EBIAT
Taxes
PAT

Adjustments:
Depreciation
Total working capital
Change in working capital
Capital expenditures
Closure costs
Free Cash Flow (Millions USD)
NPV (million$)

6.00
-6.00
584

Inflation

2.60%

ment charges)

1997

1998

1999

2000

1
2001

2
2002

3
2003

4
2004

5
2005

365

###

365

###

365

0.74
269

0.77
280

0.80
292

0.83
304

0.87
317

181

###

181

###

181

0.46
84
353

0.50
91
371

0.55
99
391

0.60
108
412

0.65
118
434

116.20 119.22 122.32 125.50 128.76


45.27
46.45
47.66
48.90
50.17
191.32 205.77 221.23 237.78 255.50
164.86 169.14 173.54 178.05 182.68
187.94 202.30 217.67 234.12 251.75

18.47
57.90

285.13

335.76

10.18
137.79
50.14
15.04
35.10

10.45
139.88
62.41
18.72
43.69

10.72
142.03
75.64
22.69
52.95

11.00
11.28
144.23 146.48
89.90 105.26
26.97
31.58
62.93
73.68

18.47

57.90

-18.47 -57.90

335.76

137.79
47.83
47.83
10.18

139.88
51.44
3.61
10.45

142.03
55.31
3.87
10.72

144.23
59.45
4.14
11.00

146.48
63.88
4.43
11.28

-285.13 -335.76

114.88

169.51

180.39

192.02

204.46

285.13

6
2006

7
2007

8
2008

9
2009

10
2010

11
2011

12
2012

13
2013

14
2014

365

###

365

365

365

365

365

365

###

0.90
330

0.94
344

0.98
358

1.02
373

1.07
389

1.11
405

1.16
422

1.20
440

1.26
458

181

###

181

181

181

181

181

181

###

0.71
128
458

0.77
139
483

0.84
152
510

0.91
165
538

0.99
179
568

1.08
195
600

1.17
212
635

1.28
231
671

1.39
252
710

132.11 135.54 139.07 142.68 146.39 150.20


51.47
52.81
54.18
55.59
57.04
58.52
274.47 294.79 316.56 339.89 364.89 391.69

154.10
60.04
420.43

158.11 162.22
61.60
63.21
451.26 484.33

187.43 192.30 197.30 202.43 207.70 213.10


270.62 290.84 312.51 335.73 360.62 387.31

218.64
415.94

224.32 230.16
446.65 479.60

11.58
11.88
12.19
12.50
12.83
13.16
11.00
11.29
11.58
11.88
12.19
12.51
259.62 279.55 300.92 323.84 348.43 374.80
77.89
83.87
90.28
97.15 104.53 112.44
181.73 195.69 210.65 226.69 243.90 262.36

13.50
12.84
403.10
120.93
282.17

13.85
14.21
13.17
13.51
433.48 466.09
130.04 139.83
303.44 326.26

11.00
68.62
4.74
11.58

11.29
73.70
5.08
11.88

11.58
79.14
5.44
12.19

11.88
84.97
5.83
12.50

12.19
91.22
6.25
12.83

12.51
97.92
6.70
13.16

12.84
105.11
7.19
13.50

176.42

190.02

204.60

220.24

237.02

255.01

274.32

13.17
13.51
112.82 121.08
7.71
8.27
13.85
14.21
295.05

317.29

15
2015

16
2016

17
2017

18
2018

365

###

365

365

1.32
482

1.34
489

1.37
500

1.40
511

181

###

181

181

1.47
266
748

1.52
275
764

1.57
284
784

1.63
295
806

166.44 170.76
64.85
66.53
516.58 526.92

175.20
68.26
540.75

179.76
70.04
556.23

236.14 242.28
511.73 521.94

248.58
535.64

255.04
550.99

14.58
14.96
13.86
14.22
497.87 507.72
149.36 152.32
348.51 355.40

15.35
14.59
521.05
156.31
364.73

15.75
14.97
536.02
160.80
375.21

13.86
14.22
129.15 131.73
8.06
2.58
14.58
14.96
339.72

352.08

14.59
135.19
3.46
15.35

14.97
139.06
3.87
15.75

360.52

370.56

NPV of Project (Section A)


No option to abandon
Project NPV at year 0 (discounted at WACC)

404.33

Amount of Investment
Initial Investment
Total Bid

404.33

17.5
###

Scenario
Low

NPV
236

Expected
High

393
584

DISCOUNT RATE PARAMETERS


Variable
Annual Risk-free Rate
Long-term Inflation
Tax Rate
Nominal Cost of Debt
Risk Premium

Debt
Nominal Cost of Debt
Debt (millions)
MV of Firm (millions)
Tax Rate
Cost of Debt
Firm Value

7.02%
2.60%
30.00%
7.65%
7.50%

WACC CALCULATION
Equity
7.65% Risk Free Rate
2205 Beta
15535 Risk Premium
30% Cost of Equity
5.36%
17740
WACC:

7.02%
0.53
7.50%
11%
10.29%