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Taseko Mines Ltd. Message Board

  • milachka2001 milachka2001 Jun 7, 2010 3:47 PM Flag

    Prosperity, yours and mine

    I did some back of the envelope calculations on Prosperity (not considering the Franco Nevada deal). All comments are welcome.

    The feasibility study gives the following info:

    - Mine life: 33 years
    - Recoverable copper: 3.6 billion pounds of copper or 109 million pounds per year
    - Recoverable gold: 7.7 million ounces of gold or 0.23 million ounces per year
    => 0.23/109 = 0.0021 ounces of gold per pound of copper
    - The cost of copper net of by-products will be USD 0.59 with gold @ USD 650/oz.

    With these numbers one can calculate that with gold @ USD 930/oz (which seems more and more realistic as people are turning to gold for safety), the operational cost of mining copper will be ZERO.

    With that assumption it is easy to calculate the yearly operational profit of the mine (mind you, there are other cost!) it is simply 109 million x price of copper.

    For argument's sake, I'll take USD 3/lbs. Aren't we being told that a copper deficit is imminent? That would yield an operational profit of USD 327 million/year. Let's say that we'll spend the 27 million on other costs like General & Admin (might be low-balling that cost, but they should have some scaling benefits from already operating the Gibraltar mine).

    So we end up with an operational profit of USD 300 million / year (gold @ 930, copper @ 3). Up to you to apply the appropriate P/E ratio.

    Sensitivity to the gold price:
    Delta USD 100/oz => Delta bottom line 23 million.
    (so if you're a believer in USD 2000 gold, add 240 million / year profit)

    Sensitivity to the copper price
    Delta USD 0.1/lbs => Delta bottom line 11 million

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