Songun Copper Project Economic Analysis and Sensitivity Analysis on Key Economic Parameters

Abstract

In the evaluation of Sungun Copper Project (SCP), a pre-financing economic model was constructed and subsequently the model modified based on the latest and most reliable data. The Internal Rate of Return (IRR) of the base case including all costs is 9.04 percent. At a discount rate of 6.5 percent and copper price of $1,985/t, Net Present Value (NPV) of the Project is 910,875.54M.R. The breakeven copper price is $1,840/t. The financial model of Sungun Copper Project has the ability to show sensitivity of the project against any changes in estimation of important economic indicators such as copper price, capital, Reinvestment and operating expenditures, discount rate and exchange rate instantly. One can see that the most sensitive factor, as is usual in projects of this nature is copper price. Capital cost is slightly more influential than operating cost indicating that optimization of both parameters will be necessary to achieve a positive NPV at copper prices below $2,000/t.