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    This document presents a financial analysis of a commercial portable sawmill operation in the Solomon Islands over a 7 year period. Key findings from the analysis include: 1) Total revenue over 7 years would be $2,520,000 assuming operating for 100 days per year and sawing 700 cubic meters of logs. 2) Total costs over 7 years would be $757,711, including capital costs of $522,550 and operating costs of $235,161. 3) The net present value is estimated to be $1,038,355 with an internal rate of return of 157% and a benefit-cost ratio of 3.3, indicating the operation would be financially viable.

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    This document presents a financial analysis of a commercial portable sawmill operation in the Solomon Islands over a 7 year period. Key findings from the analysis include: 1) Total revenue over 7 years would be $2,520,000 assuming operating for 100 days per year and sawing 700 cubic meters of logs. 2) Total costs over 7 years would be $757,711, including capital costs of $522,550 and operating costs of $235,161. 3) The net present value is estimated to be $1,038,355 with an internal rate of return of 157% and a benefit-cost ratio of 3.3, indicating the operation would be financially viable.

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    This document presents a financial analysis of a commercial portable sawmill operation in the Solomon Islands over a 7 year period. Key findings from the analysis include: 1) Total revenue over 7 years would be $2,520,000 assuming operating for 100 days per year and sawing 700 cubic meters of logs. 2) Total costs over 7 years would be $757,711, including capital costs of $522,550 and operating costs of $235,161. 3) The net present value is estimated to be $1,038,355 with an internal rate of return of 157% and a benefit-cost ratio of 3.3, indicating the operation would be financially viable.

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    10 views1 page

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    Uploaded by

    homcoact
    This document presents a financial analysis of a commercial portable sawmill operation in the Solomon Islands over a 7 year period. Key findings from the analysis include: 1) Total revenue over 7 years would be $2,520,000 assuming operating for 100 days per year and sawing 700 cubic meters of logs. 2) Total costs over 7 years would be $757,711, including capital costs of $522,550 and operating costs of $235,161. 3) The net present value is estimated to be $1,038,355 with an internal rate of return of 157% and a benefit-cost ratio of 3.3, indicating the operation would be financially viable.

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    Final report: A review of the use of portable sawmills in Papua New Guinea and Solomon Islands

    Table 2: The financial viability of a commercial single-circular saw mill operation in


    the Solomon Islands
    Parameters: operating for 100 days per year, sawing 700 cm of logs per year @ a saw
    timber recovery rate of 30% and an average beach price of SD 2,000/cm.
    Year 1 2 3 4 5 6 7 Total
    Revenue
    days operating 100 100 100 100 100 100 600
    log throuput per day (m3) 7 7 7 7 7 7
    annual log throughput (m3) 700 700 700 700 700 700 4,200
    sawn timber recovery (%) 0.3 0.3 0.3 0.3 0.3 0.3
    sawn timber (m3) 210 210 210 210 210 210 1,260
    beach price ($/m3) 2,000 2,000 2,000 2,000 2,000 2,000
    gross revenue 420,000 420,000 420,000 420,000 420,000 420,000 2,520,000

    Cost
    Capital
    mill 137,000 137,000 137,000 411,000
    chain saw 16,500 8,250 16,500 8,250 16,500 8,250 16,500 90,750
    safety equip 4,400 1200 4,400 1200 4,200 1200 4,200 20,800
    Sub-total 157,900 9,450 20,900 146,450 20,700 9,450 157,700 522,550

    Operating
    Fuel
    Sawmill 20ltrs/day @ $10/ltre 40,000 40,000 40,000 40,000 40,000 40,000 240,000
    Chainsaw 20ltrs/day @ $10/ltre 40,000 40,000 40,000 40,000 40,000 40,000 240,000
    Sub-total 80,000 80,000 80,000 80,000 80,000 80,000 480,000
    Repair and maintenance
    Saw doctor every 3 weeks @ $600/blade 9,600 9,600 9,600 9,600 9,600 9,600 57,600
    Saw mill blade replacement - 1 blade/year @$3000 3,000 3,000 3,000 3,000 3,000 3,000 18,000
    Chainsaw blade replacement every 2 months @$1,000 each 6,000 6,000 6,000 6,000 6,000 6,000 36,000
    Other spare parts 2,000 2,000 2,000 2,000 2,000 2,000 12,000
    Mill and chain saw repairs 2,000 2,000 2,000 2,000 2,000 2,000 12,000
    Sub-total 22,600 22,600 22,600 22,600 22,600 22,600 135,600
    Labour -
    mill operator @ $800/month 9,600 9,600 9,600 9,600 9,600 9,600 57,600
    chainsaw operator @ $700/month 8,400 8,400 8,400 8,400 8,400 8,400 50,400
    tally clerk and grader @ $700/month 8,400 8,400 8,400 8,400 8,400 8,400 50,400
    3 labourers @ $600/month 21,600 21,600 21,600 21,600 21,600 21,600 129,600
    Sub-total 48,000 48,000 48,000 48,000 48,000 48,000 288,000

    Total cost 157,900 160,050 171,500 297,050 171,300 160,050 308,300 757,711

    Cash flow (157,900) 259,950 248,500 122,950 248,700 259,950 982,150 1,964,300

    NPV @ r(i) = 12% $1,038,355 280,614.29


    B/C @ r(i) =0 3.3
    IRR 157%

    Page 50

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