[ATTACH] The Scoping Study assumes a Zn price of US$3,108/t...

The Scoping Study assumes a Zn price of US$3,108/t (Table 8, p.12). The current price is US$2,703.97/t. As recently as six weeks ago (w/c 11 Sep) it was US$2,295/t. The headline NPV therefore assumes Zn prices 15-35% greater than what the market will currently pay.

The project relies on a zinc equiv. price of $US2,240 to fund opex (Table 6, p.11). If/when Zn price drops below this mark (due to China slowdown, continuation of epic USD bull run, etc), the project begins eating into lead and silver credits for cashflow (both also assume values in excess of current prices) (Table 6, p.11).

The Sensitivity Chart (Fig 6, p.13) shows the project is, more than anything else, reliant on Zn price. If one assumes current Zn price (US$2,703/t), NPV of Oposura falls from A$112M to A$75M. If one assumes Zn could drop back to ithe price of a few weeks ago, NPV is A$35M.  Factor in current prices for other metals and Oposura is barely even profitable.

@gosouth suggested metal prices assumed in the Study don’t matter. One should plug-in whatever prices one considers likely in the years ahead. Fair enough. I don’t disagree. This is why I said Oposura is a project for metals bulls. Few analysts are predicting these prices. The general consensus is for Zn to remain stagnant or fall in this period (Oct 19 futures settle at US$2,633)

The enclosed chart is illustrative. The red line is obviously LME Zn spot price this past year. The green line is the Study’s assumed Zn price for the life of the project. The blue line is break-even.