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CUU own 25% Schaft Creek: proven/probable min. reserves/940.8m tonnes = 0.27% copper, 0.19 g/t gold, 0.018% moly and 1.72 g/t silver containing: 5.6b lbs copper, 5.8m ounces gold, 363.5m lbs moly and 51.7m ounces silver; (Recoverable CuEq 0.46%)

Message: Schaft Creek valuation - example 1

Teck purchased the QB2 minority interest (13.5%) in 2018.

The 2016 43-101 FS document below indicated an after NPV (8%) of $1,253M US and 11.7% IRR when using copper at $3.00 US, which in my opinion, was a good LT price back then.


Terms of the transaction:

Teck agreed to pay milestone payments.

  • 52.5M US in cash at closing
  • $60M US upon EA approval
  • $50M US 30 days before first production

That's $162.5M US total for the 13.5% interest (valued at $169.2M US) or 96% of the NAV when using copper at $3.00 US.

Additionally, the minority interest had an option for Teck to pay up to $100M US additional, if copper stayed above $3.15 US during the first 3 years of production (with some conditions).


When looking at the sensitivity analysis, copper at $3.15 US increased the after-tax NPV (8%) to $1,659.5 M US.

Therefore, Teck was willing to pay up to $262.5M US for the 13.5% interest (valued at $224M US) or 117% of the NAV when using copper at $3.15 US.

Conclusion:  Teck will pay between 96% and 117% of the after-tax NAV (8%) that was available at that time.  The minority interest, at my knowledge, did not have a carried-interest to production, therefore, was possibly on the hook for 13.5% of the QB2 capex.  With SC, we don't have this pressure, which in my opinion, warrants a premium.



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