One Number Made Copper Price Risk Look Twice as High

Now we get to the question that really matters for project risk.

What happens if the copper price drops by 30%?

We tested that in two ways — same deposit, same software, same assumptions.

The only difference was how we valued the blocks.

In the first model, everything was expressed through copper equivalent.

In the second, we kept all five products separate.

Now look at the chart.

At today's prices, both models land at almost the same NPV. So at the base case, they agree.

But as soon as we start changing the copper price, the picture changes.

The copper equivalent model shows NPV moving from about $3 billion to more than $6 billion.

The five-product model moves much less — from roughly $3.9 billion to $5.3 billion.

So according to the equivalent model, NPV changes by about 35%.

According to the product model, only about 16%.

That's more than a two-times difference in the answer to exactly the same question.

And the reason is actually very simple.

In the copper equivalent model, everything has been converted into copper.

So when you change the copper price, the model behaves as if 100% of the project's value moves with copper.

But in the deposit, copper represents only about 45% of the value.

And this is an important distinction: nobody did anything wrong.

The copper equivalent calculation is correct. The sensitivity calculation is correct.

But if you reduce the deposit to just one economic variable, the model can only show you one-variable risk.

And that is the limitation we need to understand.