Hi Mossberg,As I mentioned earlier in the week there are many...

Hi Mossberg,

As I mentioned earlier in the week there are many aspects of the Scoping study that aren't easy for me to understand.

How is NPV calculated? What does the discount rate mean? are two Qs among many.

At present my thinking for NPV, in basic terms, is the difference between how much the mine product costs to produce and what a buyer is willing to pay for it.

At this very basic level I am wondering if the figures below on cost of production are what generates most of the NPV.  

[I treated the C1 cost figures like an assay weighted average to separate scoping study into LOM, UG, and open pit costs.

Yes these are C1 not all in sustaining costs (AISC) so down the track there is a significant adjustment to be made.]

Source of C1 from scoping study.

Two ways of looking at cash generated:

per pound

Per tonne produced:

The implication to NPV are very different to your estimates Mossberg.  While I don't fully understand the scoping figures I suspect you need to revisit your assumptions because IMO your conclusions are probably incorrect.  Future metal prices and global issues will impact so buyer or seller beware.

In Au$ terms (at current prices and exchange rates) the numbers are different but IMO will stay very positive for a wide range of variation as per the sensitivity analysis

When I began this post I suspected there might be some error in your methodology Mossberg and the above makes me fairly certain there was. 

I suspect the error, if such, lies in margin for each grain of mineral being positive at Opasura for the LOM scoping study (+-35% accuracy) as long as the metal prices hold above ~$924 per tonne of zinc (LOM 42c/lb X 2200 lb in a metric tonne = $924). 

Add to this say 20% for AISC then reduce it for additional Open pit potential - in other words further studies and drilling which IMO will basically confirm and tighten up what is already known.  Opasura is close to being a mine but still hurdles to get over. 

If one judges by SP then current levels look bad for some and a real opportunity to others.

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The question you posed:  Will the company be able to borrow money if it costs more to extract each grain of mineral than the price it can be sold?

• The answer is obvious that A company would not be able to borrow under these conditions. 
• However, if each gram/grain can generate a profit (even at some 20% below current prices, as shown in the scoping study), then the answer must be YES the company may be able to borrow.
• The current financial market is not an easy one for mine developers so AZS will need to present a good case

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To bring this post back on topic my recent WILD estimate of some 6 months OP potential around Hole OPDH178 in the Central zone could change the production schedule and extend Open Pit operations out to a very profitable two years even at lower metal prices.  

GLTAH