Capricorn has used a discount rate of 5% (NPV5%) for their Mt Gibson PFS which I think is a bit too low.
Well I think it should be much higher at around at least 8% given we are in a high interest rate environment.
Another fact is that they do plan to use all free cash flow from Karlawinda to develop Mt Gibson instead of raising equity or using the 200m debt facility set up with Macquarie (but it is there in case)
So has Capricorn got it wrong or am I missing something?
I have a few theories floating around in my head why 5% is used but not really ready to share yet.
So it will be helpful if someone here can share some thoughts on whether the Mt Gibson valuation is overstated. May also explain the 8% decline today as well.