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. Q1. 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 US$ and ignore finance costs for the purpose of this report. Assume an 8% discount rate is applied to cashflows. Q2. Financial analysis metrics. Using the data contained in your DCF/NPV calculations generate the following key metrics for the project. Revenue Pb Conc Pb Recovery Pb Grade Ag Recovery Ag Grade Smelter Payability Ag% 96 % g/t Moisture Content Smelter Payability Zn % Smelter Payability Pb% In Fb Conc s/t s/t $/Oz Zn Price S/t Pb Price S/t Ag Price S/ 6 63 65 65 65 65 64.5 37 38 38 38 38 37.6 37.3 37.5 37.3 645 626.0 641.0 650.0 617.0 663.0 688.0 83 Operational cost 91.9 92.2 Mining Cost US$/t milled Processing (Concentrate) US$/t milled 23.83 25.9 2520 Surface US$/t milled 4.22 2094 G&A US$/t milled 4.97 226 Total Operating cost US$/t milled 58.92 Freight charge -Zn Freight charge -Pb Drying charge-Zn S/t conc. 50 Other data $/t conc. 40 $/t conc. 30 B S/t conc. S/t conc. (dry) 210 Discount Rate Tax 8% 26% S/t conc.(dry) 125 Applied to payable metal 4% 0 Assume working capital is equivalent to 3 months of the annual operating cost Assume Capital allowances are zero. Drying charge-Pb Treatment charge - TC Zinc Treatment charge - TC Lead Silver Refining Charge Penalties/by-product credits (i) Net Present Value (NPV), @ 8% discount rate (ii) Internal Rate of Return (IRR) (iii) NPV/Initial capex ratio (iv) Payback Period Capital costs Capital Costs 2025 2026 2027 2028 2029 2030 2031 Sustaining Capital Underground Mine infrustructure US$ '000 82,417 280 Underground Mine Development US$ '000 5,948 4,423 224 Diamond Drilling US$ '000 900 960 480 480 240 120 60 Tailings and other Ponds US$ '000 1,664 3,408 2,740 1,000 1,000 US$'000 3,383 745 386 232 153 101 US$ '000 500 500 500 500 500 US$ '000 1,500 1,500 125 63 US$ '000 54,812 11,816 5,830 2,832 2,222 898 724 Other Costs US$ '000 finance Equi[ment Lease US$ '000 2,003 2,544 2,674 3,047 Interest on Financial Leases US$ '000 801 599 417 Reclimation and Closure US$ '000 12,480 Total Capital Cost US$ '000 97,616 14,959 8,921 6,102 2,260 898 13,204 Based on your answers to Q2, 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. Mill Infrustructure Water Mangement Miscellanious Total Sustaining Costs