Trigger-based incremental investment tied to production step-ups. Only extra capacity is costed.
| Equipment | Unit $M | Cap tpa | Current | Ancillary % | Baseline Cap |
|---|---|---|---|---|---|
| 9.6Mtpa | |||||
| 6.0Mtpa | |||||
| 7.5Mtpa | |||||
| 3.5Mtpa | |||||
| 3.0Mtpa |
Rule: Incremental CapEx should NOT exceed the incremental profit it generates. If CapEx > Margin, the investment destroys value.
| Year | Target Mtpa | Step-Up | Incr CapEx | Incr Margin | Net Benefit | Payback | Justified? |
|---|---|---|---|---|---|---|---|
| Y1 | 2.64 | - | - | - | - | - | - |
| Y2 | 2.81 | +170kt | $4.2M | $30.9M | +$27M | 2yr | YES |
| Y3 | 2.97 | +160kt | $4M | $59.89999999999999M | +$56M | 2yr | YES |
| Y4 | 3.14 | +170kt | $36.8M | $90.7M | +$54M | 2yr | YES |
| Y5 | 3.3 | +160kt | $4M | $119.80000000000001M | +$116M | 2yr | YES |
| Y6 | 3.5 | +200kt | $5M | $156.1M | +$151M | 2yr | YES |
| Y7 | 3.7 | +200kt | $22.8M | $192.39999999999998M | +$170M | 2yr | YES |
| Y8 | 3.5 | - | - | $156.1M | +$156M | 2yr | - |
| Y9 | 3.3 | - | - | $119.80000000000001M | +$120M | 2yr | - |
| Y10 | 3 | - | - | $65.4M | +$65M | 2yr | - |
Total Incr CapEx: $77M vs Total Incr Margin: $991M = Net: $+$914M
6 years justified — incremental margin exceeds CapEx spend.
Best practice: Only invest when incremental margin covers incremental CapEx within 2-3 years. Years with payback > 3yr should be reviewed.
| Equipment | Y1 | Y2 | Y3 | Y4 | Y5 | Y6 | Y7 | Y8 | Y9 | Y10 |
|---|---|---|---|---|---|---|---|---|---|---|
| CAT 785 Truck | 12 | 12 | 12 | 12 | 12 | 12 | 12 | 12 | 12 | 12 |
| CAT 6030 Excavator | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 |
| Atlas Copco D65 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 | 3 |
| Primary Crusher | 1 | 1 | 1 | 1 | 1 | 1 | 2 (+1) | 2 | 2 | 2 |
| SAG Mill Module | 1 | 1 | 1 | 2 (+1) | 2 | 2 | 2 | 2 | 2 | 2 |
| Incr CapEx $M | - | $4.2 | $4 | $36.8 | $4 | $5 | $22.8 | - | - | - |
| Cum CapEx $M | $0 | $4.2 | $8.2 | $45 | $49 | $54 | $76.8 | $76.8 | $76.8 | $76.8 |
Maintains existing ops: equipment replacement, TMF lifts, infrastructure upkeep, safety/compliance.
Expands capacity: new pits, plant upgrades, major infrastructure. Justified by incremental NPV/IRR.
Sustaining CapEx (equipment replacement, TMF lifts) discounted at 6% — low risk, predictable. Development CapEx (plant expansion, new pits) discounted at 12% — higher technical/market/permitting risk. The 6% premium ensures growth projects earn above the cost of capital.
| Year | Target | Incr Tonnes | Incr Revenue | Incr Opex | Incr CapEx | Incr CF | Cum CF | Disc CF | Cum DCF |
|---|---|---|---|---|---|---|---|---|---|
| Y1 | 2.64Mt | - | - | - | - | - | - | - | - |
| Y2 | 2.81Mt | 0.17Mt | $35.9M | $5M | $4.2M | $26.7M | $26.7M | $22.9M | $22.9M |
| Y3 | 2.97Mt | 0.33Mt | $69.6M | $9.7M | $4M | $55.9M | $82.6M | $44.4M | $67.3M |
| Y4 | 3.14Mt | 0.50Mt | $105.5M | $14.8M | $36.8M | $53.9M | $136.5M | $39.6M | $106.9M |
| Y5 | 3.3Mt | 0.66Mt | $139.3M | $19.5M | $4M | $115.8M | $252.3M | $78.8M | $185.7M |
| Y6 | 3.5Mt | 0.86Mt | $181.5M | $25.4M | $5M | $151.1M | $403.4M | $95.2M | $280.9M |
| Y7 | 3.7Mt | 1.06Mt | $223.7M | $31.3M | $22.8M | $169.6M | $573M | $99M | $379.9M |
| Y8 | 3.5Mt | 0.86Mt | $181.5M | $25.4M | - | $156.1M | $729.1M | $84.3M | $464.2M |
| Y9 | 3.3Mt | 0.66Mt | $139.3M | $19.5M | - | $119.8M | $848.9M | $59.9M | $524.1M |
| Y10 | 3Mt | 0.36Mt | $76M | $10.6M | - | $65.4M | $914.3M | $30.3M | $554.4M |
Baseline = Y1 production (2.64Mtpa). Incremental = extra tonnes above baseline x NSR - extra opex - incremental CapEx. All values above baseline only.