Brazilian Granite Mines
by Paulo Carneiro
(Salvador, Bahia, Brazil)
The feasibility report provides 3 different scenarios, among which the Scenario #1 is based on a 10-year Cash Flow, with Capital Cost of 8.5% and Investment of US$24,077,387.31 generating a 39% IRR, US$50+ M NPV, and the highest Annual Income of US$28,454,400.00. This investment consists of machinery, equipments, building and working capital in four own (4) granite mines and one (1) processing plant, and may be applied to other mineral assets to be leased and/or acquired, considering also an expansion of mineral portfolio, including other commodities.
The four (4) Mineral Properties, are located in the State of Bahia, Brazil owned by the company Craton-Roche Recursos Minerais Ltda. The Properties are mineralised with Gneiss and Granulite (according to its petrographic characterization, commercially known as Granite), recommended for ornamental uses such as flooring, paving, funerary and other building applications. The stones’ aesthetics reinforce their concomitant technological properties determining a wide utilisation. Additionally, the Proved and Probable Mineral Reserves guarantee the proposed investment, having in mind the financial feasibility of such accomplishment and the Properties’ legal situation that meets all relevant criteria to materialise the productive cycle.
Prospecting and research works started in 1994 and, at the present time, the mines are classified as Production and Development Properties, which economic viability has been demonstrated or in other words shovel ready. The project structures the annual production at 16,581 m³ (cubic metres) of raw material being transformed into 547,200 m² (square metres) of processed stones. A general view on the project’s environment also remarks the combination of three issues that enhances the project feasibility: (1) the growing demand for granite required by the building industry, (2) the fact the mineral reserves exceed the amount required by the project and the (3) settlement of a production facility assembled with the most modern technology available in the stone industry.
In conclusion, the Valuation presents detailed information such as financial, geological, mining, legal and environmental issues, setting the Properties Value, based on their In-Ground Proved Reserves, at US$211,579,370.63.
Simple Pay Back 2,55 years
Discounted Pay Back 2,93 years
Net Present Value $ 50.561.416,52
Net Future Value $ 114.318.525,55
Net Uniform Value $ 7.705.949,46
NI – Net Interest 3,10
Internal Return Rate 39,22%
External Return Rate 22,26%