A junior mining company is reviewing the economic potential of a proposed development project

at its Lala zinc$-$lead $(Zn-Pb)$ project in New Brunswick, Canada. The project is based around a

historic mine and mill complex with a significant degree of infrastructure in place and on care and

maintenance.

Continued exploration has identified a small but high$-$grade orebody at depth which could be

mined and brought into production using much of the existing mine's footprint, simply

refurbishing and upgrading the mill and tailings facility etc.; although a completely new

underground mine and access is required. This has been designed and a schedule of outputs

generated.

As a mining analyst for the company you have been tasked with assessing the "value" of the

Lala Mine as a potential investment opportunity. To do this you are required to create a DCF$/$NPV

assessment for the mine based on the Deswik production schedule provided and the cost data

already available. Cost data is provided in the data pack.

Q$1.$ DCF$/$NPV Analysis

Using the spreadsheets and data Lewis Meyer has distributed $($and$/$or posted on ELE$)$ as a start

point you are required to build up a discounted cashflow $($DCF$)$ statement for the Lala Mine;

sufficient to calculate a Net Present Value for the project.

You may wish to use and adapt one of the NPV analysis template available on ELE or create your

own, making sensible assumptions if needed on factors not provided. You will need to update and

complete an NSR calculation as part of the revenue forecasts. Work in $2024$ USS and ignore

finance costs for the purpose of this report. Assume an $8\%$ discount rate is applied to cashflows.

Q$2.$ Financial analysis metrics.

Using the data contained in your DCF$/$NPV calculations generate the following key metrics for

the project.

$($i$)$ Net Present Value $($NPV$),$ @ $8\%$ discount rate

$($ii$)$ Internal Rate of Return $($IRR$)$

$($iii$)$ NPV$/$Initial capex ratio

$($iv$)$ Payback Period

Based on your answers to Q$2,$ comment on the suitability$/$viability of the Lala project as an

attractive investment opportunity. Include in this discussion an examination of the likely price

drivers for zinc$-$lead in medium$-$long term, the suitability of these as a commodity to invest in and

the broader business risks that may affect development of a project of this type and given its

location in Canada. Consider Key Economic risks and Conduct a Sensitivity Study on them.

Revenue