Abstract
Pierre Landry and William E. Roscoe
In past studies we have compared the Net Present Value (NPV) in Preliminary Economic Assessments (PEA) with market transaction value and market capitalization of junior companies holding the gold project. The present study on copper projects similarly compares NPV in PEAs to market transaction value and market capitalization. Similar to gold projects, PEAs of copper projects commonly use low discount rates. We have compared the NPV in PEAs of copper projects to (a) the market value of a transaction on the project and (b) the adjusted market capitalization of a junior company for which the project is its major asset. In most cases, there is a significant difference between the NPV and the other two parameters, where the transaction value and the market cap are significantly lower than the NPV. The differences can be rectified by applying a higher discount rate to bring each project NPV into line with the transaction value or the market cap. We have also compared our results for copper projects with the results of our previous studies on gold projects.