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EMED Mining: An Updated NI 43-101 Technical Report

Contributed by Fox-Davies Capital

EMED Mining Public Limited (“EMED") has announced that an independent technical expert Behre Dolbear, has completed an updated NI 43-101 Technical Report on the Company's Rio Tinto Copper Project.

This report updates the previous NI 43-101 technical report dated November 17th 2010. There are some minor changes to the production schedule but there is a further six month delay in the start-up date. We checked the stripping ratio and production profile which are both similar to the one in our model. However, the new schedule for production commences in mid-2014, whereas we had previously assumed production started in the March quarter of 2014.

The real changes have come in the cost lines with both operating and capital costs up sharply. In round terms we calculate that total life of mine operating costs are up about 15% and that capital cost estimates are up about 12%.

However, the report shows that at a copper price of $2.50/lb, substantially below the current copper price, the project has an NPV of $171 M after tax, using a 10% discount rate. At a copper price of $3.50/lb, the NPV rises to $427M after tax, again using a 10% discount rate and gives an internal rate of return of 32%.

Given the current cost pressures on the mining industry in general, this is a very positive outcome, and we note that the current copper price is $3.73/lb, well above the “high" figure used in the report.

The report also highlighted the exploration potential peripheral to the Cerro Colorado deposit which is open to the east and at depth.

In summation, the project is viable and appears to be robust and well analysed in geological, engineering and financial terms. All that is required are the elusive mining permits and approvals.