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Pre-feasibility EBITDA Analysis of Korab Resources Ltd's Winchester Magnesite Project

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Yesterday’s ASX announcement by Korab Resources titled ‘Winchester Magnesite Direct Shipping Ore Feasibility Study Results (Earnings, NPV, EBITDA, CAPEX, and OPEX)’1 estimated an EBITDA over a period of 12 years to be between AUD$613.60 million to AUD$614.20 million. These earnings were estimated assuming a tonne of magnesium carbonate priced at USD$105.00 at an exchange rate of AUD$1.00/USD$0.80.

Following sections of this blog post analyses estimated EBITDA after the application of consumer price index. For the purpose of this analysis it is assumed the increase in CPI over 12 years of the Winchester project life will be identical to average increase in CPI over last 12 years for which data is available (i.e. 30/06/2006 to 30/06/2017) on ATO and ABS website2.

Quarter ending CPI rates actual as per ATO website3:

Year
31 March
30 June
30 September
31 December
2017 110.50 110.70 111.40   112.10 2016 108.20