Question: Two (mutually exclusive) mining projects have the following cash flows: Project A Project B 2021 -$8MM -$2MM 2022 $2MM $4MM 2023 $2MM $3MM 2024 $2MM

Two (mutually exclusive) mining projects have the

Two (mutually exclusive) mining projects have the following cash flows: Project A Project B 2021 -$8MM -$2MM 2022 $2MM $4MM 2023 $2MM $3MM 2024 $2MM $2MM 2025 $2MM $1MM 2026 $2MM -$7MM 1. What is the Net Cash Flow (across all years) for both projects? 2. What is the Internal Rate of Return for both projects? 3. What is the Payback Period for both projects? 4. What is the Net Present Value for both projects: i. Assuming a discount rate of 2% ii. Assuming a discount rate of 5% 5. You are the CEO of a mining company. Which project would you invest in? (Justify your answer). Notes 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Units Tonnes $/Tonne SAUD 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 Project Item Production Copper Price Gross Revenue Capex Opex Closure expenses Net Cash Flow 9000 SAUD SAUD SAUD SAUD % 12.00 1 Discount rate Discount factor Present values Net Present Value # SAUD SAUD

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