Centerra's Kumtor Sensitivity

Centerra Gold, a Canadian mining company, recently released its NPV analysis of the Kumtor Mine, which is located in Kyrgyzstan. Centerra's release includes the projected cash flows for the next 11 years, the expected life of the mine. Centerra also conducted several sensitivity analyses, including a change in the discount rate, a change in the price of gold, changes in operating and capital costs, and changes in the exchange rate. We should note that Canterra proposes that the discount rate should only be 5 percent. This number seems low to us, especially when analyzing a project in a foreign country.