Buchans Lundberg Project Has Net Present Value $192.6 Million

Buchans Minerals Corporation (TSXV:BMC)

Basic Shares 150.9 million
Fully Diluted 193.7 million
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A Junior Explorer constantly faces the challenge to prove the true value in a property it owns based on what it can extract from the ground.

Buchans Minerals has gone the distance on its flagship property Lundberg, located in central Newfoundland, and has completed a fully NI 43-101 compliant Preliminary Economic Assessment (PEA) and conceptual open pit mine plan. The PEA at Lundberg forecasts a net present value (NPV) of $192.6 million and an internal rate of return (IRR) of almost 41% if it were to mine at the once richest base metal mine in North America.

The total life of the new mine if it were to process 5,000 tonnes per day would be 10 years with an average operating cost of $26 per tonne on net revenue of $52.95 per tonne.

Total capital expenditure for the project is about $152 million with cash-flow over the life of the mine estimated at $433 million. The $433 million could be a low estimate as it is based on today’s depressed metal prices and could be substantially increased if metal prices were to increase over the life of the mine.

Although management hasn’t disclosed how it would raise the $152 million, some options would be as follows:

• Funds could be raised through conventional debt instead of equity


• A direct sale of Lundberg could occur


• A joint venture partner earning in on the property


• A spin-out company is created for the Lundberg Mine
  

Any one of these options should increase shareholder value.

Currently Buchans trades with a market cap of under $10 million and owns several properties, each with the ability to substantially increase the company’s value on its own, not to mention the Lundberg property value of over $192 million.

Warren MacLeod does an excellent job explaining today's news in a short video called "Lundberg Presentation" that can be viewed by clicking on the picture above

http://www.buchansminerals.com/