Capital & Operating Costs
- The capital cost estimates for the project have a base date of 19 November 2013 and are expressed in United States dollars. They assume a diesel price of US$0.88/l, USD = 1.11 AUD and USD = 11,250 Rupiah (IDR). They do not include accuracy provision or contingency.
- The full production and life of mine operating costs for the Wetar Copper Project are as follows:
Customers and Off-Take Partners
Wetar copper cathode is currently sold under off-take contracts with Tennant Metals Pty Limited and Standard Bank PLC, each for 40% of the life-of-mine production with the remaining 20% committed to Daewoo International Corporation.
All product to date has been sold into Asian markets at a premium to LME copper prices reflecting spot premiums in Asia and the quality of the cathode. Sales to Indonesian markets have commenced.
Key financial assumptions used in the financial analysis
- Copper price for the base case is $7,000 life of mine which is in line with the forward copper curve as at 15 November 2013.
- Discount rate 10% (approximates Company’s weighted average cost of capital, WACC);
- IDR/USD exchange rate 11,250;
- Diesel fuel price US$0.88/litre, MFO fuel price US$0.71/litre;
- Tax rate of 25%, royalty rate of 4%.
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 ~$80m for every $1,000 change in the copper price.
The annual project EBITDA for the project at capacity production above a $6,000/t copper price equalled Finders’ market capitalisation at the date of the BFS.
Higher grades and recoveries achieved during the demonstration phase have the potential to add a full year’s production and US$70m to the project NPV. Given the high operating margins the project is not overly sensitive to changes in operating or capital costs.
Impact on NPV (US$m)
Key cost drivers for the Wetar Copper Project include cathode produced and tonnes mined.
A summary of the key cost items is set out below: