Member Info for allthatguff

Link..

https://miningindaba.com/exhibitors/mpd-congo

BOOM!!!!

MPD Congo

Stand: ES26

Mining Company

Ticker: Private/unlisted

Website: N/A

Project Location: Congo

Commodity Exposure: Iron Ore

Company Description: MPD Congo is an iron ore exploration and development company, incorporated in the Republic of Congo also known as Congo-Brazzaville. MPD Congo main asset is the Zanga Iron Ore Project located in the Lekoumou department. Since December 2022, Zanaga Iron Ore Company Limited (ZIOC) own 100% of MPD Congo. ZIOC is a company listed on AIM since November 2010.

The Zanaga iron ore Project is designed to be advanced on a staged development basis. This results in reduced capital costs, lower execution risk, and maximized capital returns for the Project. The Stage One development consists of a 12Mtpa operation, with Stage Two expanding the operation by a further 18Mtpa to produce a total 30Mtpa of high-quality iron ore product over a 30 year mine life. Transportation to port will be via slurry pipeline in both stages, which facilitates the low-cost delivery solution. The Project enjoys the benefit of having already secured its Mining Licence, Environmental Permit and Mining Convention from the Government of Republic of Congo.

Location

Brazzaville, Congo

Mining Indaba next week. Corporate announcement of deal, is that our understanding? Big news coverage guaranteed! Place your bets folks, line up.

Has to be a strong possibility with corporate RNS on same day. Where better to announce? All eyes on next week.

I would HATE to be OUT over the weekend 😂😄🚀⚡

The question is "do you feel lucky?"

Brave assertion MM 😀 . Be interested in your view after the long discussion of this on th other board.

On another note, I would also be curious to see a NPV for the project based on full pellet production. I know nothing about the production costs of pelletisation (depending on approach used of course). How good would that look?

I would save the money of the flight and buy more shares 😄

Or is it just that we are deeply impatient and champing at the bit?

I agree with alwayshoping, you can hide a lot under the RNSed strategic partner process. You can agree a deal without doing the formal bit yet. The timeline and events also indicate that this is done. Yes once they go public, there will be a formal legal process of ratifying this deal and that will have a timeline. All in my opinion but that is what I see from a probability point of view. We have had 2 years of negotiation that has been alluded to and acknowledged in RNS's. They will not talk forever.

So what is your grand comparative valuation then yogi?

I am sure AT will say, whoops, that all slipped my mind. Poop I haven't even booked the venue yet 😁

And using your exact same question SB..tjis is the result

"For valuation purposes, a discount rate of 14%–16% would be reasonable as a base case, reflecting the project's high-risk jurisdiction, infrastructure dependencies, and commodity exposure. Sensitivity analysis should be conducted using a range of 12%–20% to account for varying risk scenarios.'

So that tallies with my previous one. Thank you everyone else for your patience with all this chatgpt pasting and posting. BUT I think this is important to clear this up and makes it easier to evaluate our own measure of what is a good deal and what our own exit points may be. I am modifying my own expectations (which are high) but this beast of a resource is still hugely valuable. So maybe£3-£4 iper share is more realistic..

Hi SB, I have run it again and added word open cast and ran for gpt-4o.

Prompt 'What would be an appropriate project discount rate for the Zanaga Iron company 30 million tonnes per annum premium 67.5% open cast iron ore project located in the Republic of Congo ?"

Answer. Now gives..

Adjusted Discount Rate for Sensitivity Analysis:

Use 12% as a lower bound to reflect an optimistic scenario with reduced risks.

Use 15%–16% as a base case for conservative financial modeling.

Use 18%–20% as an upper bound for worst-case scenarios.

/// So, chatgpt is pretty much useless and untrustworthy for the ROC. I would side towards the companies 10% if the port, power and financingand political are derisked. This shoes how important these factors are in what the company is currently doing with it's MOUs. I do concede that 10% is probably optimistic from a buyer's perspective but there then is the counterweight of the other factors of the unique characteristics of this projects..scale, longevity and quality. So the discount rate could be higher than 10%, if chatgpt is used as at all (??) maybe 12 -14% is a reasonable compromise? In the end it does cone down to who really wants this and Glencore is a tough main shareholder..

This discussion has been extremely useful for me, thank you. .

The end of my last post got chopped..In summary the DRC is a poor proxy for the discount rate for the ROC, it would be lower.

Also 12%-16% from my chatgpt isummary is higher than 10% but not as crazy as 20-30%. So again what was your question to chatgpt, SB?

Another issue. How did the Xstrata NPV deal get done originally if that was 10% ?

Also, I stand by my conviction on longer term projects and NPV and also the issue of strategic value for rare projects with premium characteristics.

Finally, thanks SB for the discussion, this is interesting!

Managed to squeeze some time..my chatgpt q and a

Q.."What would be an appropriate project discount rate for the Zanaga Iron company 30 million tonnes per annum premium 67.5% iron ore project located in the Republic of Congo ?"

Answer..

Determining an appropriate **project discount rate** for the **Zanaga Iron Ore Company's** **30 million tonnes per annum (Mtpa) premium 67.5% Fe project** in the **Republic of Congo** involves assessing various risk factors, including country risk, commodity risk, financing structure, and industry benchmarks.

### **Key Considerations for Discount Rate Selection:**

1. **Country Risk (Republic of Congo)**

- The Republic of Congo is classified as a high-risk jurisdiction for mining investments due to political instability, regulatory uncertainty, and infrastructure challenges.

- Country risk premiums (CRP) for African nations can range between **5%–10%** depending on the specific risks of the country.

2. **Commodity Risk (Iron Ore Market)**

- Iron ore prices are highly cyclical, and while **67.5% Fe premium ore** attracts a higher price, the long-term price volatility must be considered.

- Mining projects generally use discount rates between **8%–12%**, with higher rates applied to projects in developing markets.

3. **Financing Structure & Cost of Capital**

- If the project is heavily debt-financed, the weighted average cost of capital (WACC) will be lower.

- If equity financing is dominant, required returns could be higher, especially in emerging markets.

4. **Comparable Iron Ore Projects**

- Large iron ore projects in **low-risk jurisdictions** (e.g., Australia, Canada, Brazil) often use discount rates of **7%–10%**.

- In high-risk regions like Africa, discount rates are usually **10%–15%**, sometimes higher if country risks are extreme.

5. **Infrastructure & Execution Risks**

- The need for significant infrastructure investment (rail, port, and power supply) increases execution risk.

- Higher discount rates (above 12%) might be warranted if substantial new infrastructure is required.

### **Estimated Appropriate Discount Rate**

Given the **Republic of Congo's risk profile**, iron ore market exposure, and project-specific factors, an appropriate **discount rate** for the **Zanaga Iron Ore Project** would likely be in the range of **12%–16%**.

- **Lower end (12%)** if infrastructure is secured, financing is de-risked, and iron ore markets remain strong.

- **Higher end (15%–16%)** if political risks, financing uncertainty, or execution challenges remain significant.

### **Conclusion**

For financial modeling and Net Present Value (NPV) calculations, **a base case discount rate of 14%–15%** would be a reasonable assumption, with sensitivity analysis around **12%–16%** to account for various risk scenarios.

////

So SB, in your chatgpt it made use of the DRC discount rate as a proxy. That is not a good one. As it is widel

Ok, SB. I cannot evaluate that without knowing the question that you fed into it. I get a different answyy with my chatgpt question, nowhere near 20-30%. Let me know and I will have to leave this for now, will have another look tomorrow.

Fact is with the current JORC Zanaga could easily support a 60mtpa for 30 years as stated before and referenced...if the unexplored 50% of ore body is similar to the first half, that could support a potential 120mtpa for 30 years (speculation of course). This thing is similar to Simandou but with better premium product. And I am not even talking about the iron ore deeper than 300m. With discount rates everything becomes equal past a certain time point.. but these resources are not equal! Strategic players recognise this, imo. Not all projects are equal, Zanaga is a strategic gem. Discount rates do not explain or recognise that.

Research

https://papers.acg.uwa.edu.au/p/2063_76_Ovalle/

"Analysis of the discount rate for mining projects'

"Abstract:

The discount rate is one of the key planning parameters for defining and ranking mining projects. As miners, we assume that it is determined by a higher authority and take it as given. However, from the standpoint of a mining project, it warrants analysis. This paper discusses its definition and calculation, looking at the discount rates used in different sectors of the economy, including mining. In the case of mining, 100 projects were selected from the SEDAR database and discount rates were analysed by country-location, stage of development, size, the metals and minerals involved and project life. The average discount rate of the 100 projects was 7.18%, including 35 projects that used 5%. When these projects were excluded, the average rate was 8.36%. The discount rates used by a mining corporation over the last 50 years and an example of the effect of the discount rate on reserve determination for a block caving project are also shown and lower discount rates are recommended for long-life mining projects.'

*""LOWER DISCOUNT RATES ARE RECOMMENDED FOR LONG LIFE PROJECTS*" ...that was my point exactly, it becomes ridiculous!!

Forget the 25%, no chance!

Thanks for the reply Starbight. Sure, with an outlandish discount rate, anything beyond 5 years plus becomes negligible. With regard to your mooted 25%, you are joking I hope, that would kill any project and is ridiculous. Are you also suggesting ZIOC is so inept or inexperienced in that they would choose a 10% discount rate. I know who I would rather believe..

Also, as an example who would buy a shorlife mine of eg years 5 that pays for itself, makes some profit and then is defunct. It becomes a fallacious view of the world beyond a certain point. Would you rather buy a project that only has stage1 or one that can be advanced to stage 2. It wouldbe ridiculous to suggest that would only be worth 5.6p share more..

And 99, it actually is what they say they are working for, it certainly is an option. Just like I mooted before, a steel based consortium could buy in and ZIOC mines it (eg consortiumJapanase companies, JFE Steel etc).