Member Info for observer842

I'm pretty certain it's 1291.7... You can check it by adding the two numbers in the next two rows which are easier to read. e.g. 64.59 + 1227.175 = 1291.765. But it really doesn't matter! ;-) Besides, I'm using the EBITDA, I just included that for reference when trying to understand how the BoD arrived at their estimates.

The thing about using a different exchange rate to 3.6 is that the revenue flows are then not from the $61/t (62%) and $80/t (65%) used in the JRP (think about it), so you would need to adjust those and other things too. Better to stick to 3.6 and adjust in what ever direction you think an improving exchange rate would impact the project. I think it will have improved the NPV due to the OpEx being lower. I'm going to recheck the 1292 figure! LoL.

How does this compare to what you've extracted @Cause?

https://pje.trt8.jus.br/primeirograu/Processo/ConsultaDocumento/listView.seam
20012416350764800000023996777
===[
Year : Revenue net of shipping : EBITDA
2019: 0 : 0
2020: R$148 : R$115
2021: R$148 : R$115
2022: R$386 : R$200
2023: R$760 : R$502
2024: R$1388 : R$938
2025: R$1292 : R$832
2026: R$1292 : R$816
2027: R$1292 : R$800
2028: R$1292 : R$783
2029: R$1292 : R$765
2030: R$1292 : R$749
2031: R$1292 : R$727
2032: R$1292 : R$707
2033: R$1292 : R$688
2034: R$1292 : R$665
2035: R$230 : R$91
]===

Although the USD to BRL has changed from that which I concluded was used in the JRP (3.6) I think it's best to stick with that.

As you are hinting, the NPV you use is up to you. Typically the point is to choose one which allows you to compare different projects, financing and sensitivities, usually in conjunction with the IRR (internal rate of return), which is the discount rate which gives a zero NPV - the higher the better, and other metrics.

You might want to use a low NPV to compare against certain projects - gold miners typically use 5%.

This got shared around these boards a lot several years back. Still relevant today:

"How to value junior mining stocks" (07 September 2015)
https://masterinvestor.co.uk/latest/how-to-value-junior-mining-stocks/

I make it that prices of around $100/t add around $1.5B of pre-tax NPV6 to the project over the $61/t baseline. Incredible really.

Also using an NPV10 for this particular scenario is quite conservative, an NPV5 might even be appropriate - but probably not for other scenarios!

I think they are normally updated within 12 to 24 hours, but I think a few times it's been longer. @tomcat?

@Cause Don't forget that the 1 billion is pre tax and a few other things which you can lump together into the "tax" bucket. As to: "So does this mean the NPV of revenues- shipping cost should be almost 1 billion more than the forecast of JRP?" - if the iron ore prices stayed around today's price for the life of mine, rather than $61/t, then it looks that way to me. :-))

Or Wednesday if the court ruling is made late in the day tomorrow (if it wasn't made today)

There are many different ways of coming at the problem. As you recognise, doing what you did increased the cost of the shipping. Now it is possible that shipping costs would be higher when iron prices are higher, but since this isn't necessarily the case I would say it is best not to follow a method which introduces that link.

I'd say the simplest thing to do is to assume that if the prices of our 62% Fe product goes up $39/t, then the price of our 65% product goes up by the same amount. The additional gross revenue at full production is then simply $39/t * 5.3Mt.

As to your other questions. Most of the details are reasonably swamped by the larger signals. I think it is fair to say if all goes well we'll own 27% of the JV, with likely little, perhaps no dilution, so you can then equate that to a contribution to the share price if you like. I don't think it is safe to assume we'll get to 49% or that there won't be dilution if we do, as it depends on lots of factors.

Depends what your goal is really. Perhaps the JRP massively overestimates some costs, but underestimates others? It's only *their* estimate of Earnings Before Interest, Taxes, Depreciation and Amortization aftera all. LoL. If I were you, I'd have a go at understanding why I stated: "I make it that prices of around $100/t add around $1B of pre-tax NPV10 to the project over the $61/t baseline. Incredible really."

@Cause - it's a similar story with the CapEx of the project too - though when doing rough calculations it is normal to just remove whatever it is from the NPV calculated from future cash flows. Strictly if you were able to borrow $1m today for CapEx requirements, but had a magical agreement where you didn't have to repay it for 100 years, then the NPV10 of the project would only be reduced by $72. You'll see that the envisaged CapEx repayment schedule associated with DIP Finance A, B, C, which includes interest, is included in the JRP, so if you really wanted to you could do this in detail. Though I'm wondering if you are in danger of running before you have learnt to walk! LoL. Keep it simple initially. Make sure you have got the procedure correct and that you haven't missed out any big ticket items. Once you are confident of this you can sweat the details until your heart's content :-)

I see why you may think that. But that's not how it works in practice. Imagine you acquired a company with $1m of debt, but for whatever reason the third party you owed the debt to didn't want it back for 100 years. The PV10 of that debt today is $72. Obviously that's a bit of an extreme scenario, but the point is when you take on a company with debt, the negotiated debt repayment structure is vitally important in calculating the NPV and IRR of the project.

Out of interest, the PV5 of the debt would be $7,604 - big difference.

@Cause. I'm not sure exactly what you are doing, but you'd normally discount the future cash flow associated with the debt repayment to the present. Not the actual value. e.g. $100 repayment in 5 years time reduces the current NPV10 by $62.09

I thought I'd end with something a little bit, shall we say, more accessible. ;-)

"Amapá Iron Ore Project Given Court Approval to Commence Iron Ore Shipments" (14 April 2020)
http://irservices.netbuilder.com/ir/cadence/newsArticle.php?ST=REM&id=311428203156429223
===[
In addition, the Court has requested that the secured bank creditors reach an agreement with the JV Partners and DEV within 60 days or the Court might rule on the annulment of the Bank Liens and consider the banks as unsecured creditors. As unsecured creditors, the bank's credit will be subject to restructuring plan limits and discounts and be paid from free cash flow from DEV, which may be over fifteen years.
]===

"Amapá Operational Update" (16 June 2020)
http://irservices.netbuilder.com/ir/cadence/newsArticle.php?ST=REM&id=31142820630381634
===[
We have also been informed that due to court closures during the current COVID-19 outbreak in Brazil, a ruling in relation to DEV's petition to annul the secured creditors liens and charges over the Amapá Project is now scheduled for the end of June 2020.
]===

@Dallas's translation has this wrong: "(b) the other fifty percent (505) of the capital remaining will be paid through a payment in the tenth of this year." should read "(b) the other fifty percent (50%) of the capital remaining will be paid through a payment in the sixteenth year." which slightly confused me, but I think my understanding still rides, as the R$185 gradually goes to zero, whereas the R$818m gradually reduces by something like (very roughly) ~R$25m for several years then has a final bound from something like R$184.5m to zero, presumably corresponding to this final 50%?

It would really help if you could see the tables. Because of: "4.5.1. (a) fifty percent (508) of the remaining capital will be paid in eight (8) annual installments from eighth year; and (b) the other fifty percent (505) of the capital remaining will be paid through a payment in the tenth of this year." I can see that the R$818m likely conforms to this, and is therefore this unsecured credit mentioned. Whereas the R$185m doesn't conform to this.

One thing just crossed my mind. Perhaps the debt in the JRP is mostly denominated in USD, which means on the day of the announcement when expressed in terms of BRL it will be larger than that contained in the JRP, by 4.14/3.6. i.e. My R$1.35B from @22:42 would become closer to R$1.5B (R$1.55B). You have arrived at your destination. LoL.

If you like @tomcat. Perhaps I'm taking too colloquially. I pity anyone trying to follow this! LoL. The point is, there appears to be R$1.17B of debt which if the JRP goes ahead in its current form will reduce to around R$818m and be paid out under a predefined schedule - the JRP refers to this as unsecured credit (Unfortunately I use debt/credit interchangeably as I switch my perspective). There is other debt what looks like R$185m which we don't know whether it has had a hair cut, and this is paid out under what looks like a more favourable repayment schedule: sooner, but longer.

Perhaps I'll pay the £2k for the report? LoL.

"Amapa iron ore mine" (17 June 2020)
https://www.woodmac.com/reports/metals-amapa-iron-ore-mine-17230546
===[
$2,250

Tables and charts
This report includes 12 images and tables including:

Detailed map
Participation
Marketable reserves (at 01/01/2020)
View all tables and charts in this report
Production
Production
Operations
Infrastructure
Cash costs
Cash costs
Capital costs
Product quality
Economic assumptions
What's included
This report contains:

Amapa iron ore mine PDF 833.17 KB
Amapa iron ore mine ZIP 856.83 KB
Amapa.xls XLS 183.00 KB
]===

I agree with this though! And a good observation :-) "what is good news to know though... is that it looks like the project is going forward with the same level of debt it had previously... not compounding new debt onto existing..."