Wednesday, July 22, 2015

Updated NPV Calculation

There have been 2 key events that occurred over the last month that has lead to some adjustments in the current NPV calculation.

Here is the current NPV calculation -- NPV #4 calculation

The result is an NPV of CAD$530 million discounted at 7% to today (year 2015) and assumes production in 2020.

The key bits of updates are included in 2 sources of information.

One is from an interview available to the public by Tom Peregoodoff --- Interview with Tom


"Based on CH-6 and CH-7, Peregoodoff also believes a Phase 1 mine development at Chidliak has the potential to produce at least 1 million carats per year."

@ 1 million carats, the mine life goes to 20 years...but the revenue and operating costs per year go down as well. The capital cost of a mill of 500K tonnes per year will be cheaper than a 1 million tonne per year mill. There is a strong possibility that Chidliak will start with a smaller mill and scale up the mill as cashflow and available kimberlite tonnage permits.

The second point is from the recent news release on the Chidliak field program -- Summer program

The key point is the TFFE in CH-6 has close to 2 million tonnes in the above 250 metre category. This program update has a target to just convert 1 million of those tonnes to inferred. That updated target is what is included in the NPV calculation.

Those are the 2 key pieces of information.

This PEA in 2016 can be considered a base case.
Options beyond the PEA:

1 - more tonnage at CH-6 gets converted to TFFE.
2 - UG below 250 metres at CH-6 gets targeted and included in inferred at some point.
3 - CH-44 gets a bulk sample value and included in the mine plan.
4 - CH-45/46 and other potentially economic pipe get tested and brought into the Mine plan.
5 - All of the above can lead to a significant scaling of the mill to a 1 million tonne per annum capacity and that will have significant effect on the NPV.


  1. Good work Mike, very conservative approach which is prudent at this point.

    1. Another way of saying conservative is that Chidliak is chock full of potential beyond this base case. We all know that. Just look at the right navigation and all the kimberlites not included in the study. Just 2 of them are.