Valuation of Mineral Projects based on Technical and Financial Modelling

Background

Current market turbulence has increased the need to understand the interrelationship between technical and financial risk.  The key consideration is the intrinsic value of a  mineral project.  Where current market conditions undervalues the true long-term worth of assets which is then reflected in low share prices, strategic planning can identify opportunities . Ability to secure debt finance for both development and acquisitions for advanced project allows greater strategic flexibility.  Understanding how this impacts on the valuation of projects also permits an objective approach to determining levels of gearing. This is relevant to both the investment banking and mining communities.  The Valuation of Mineral Projects course is designed to address these issues.

Course Aim and Structure

This course aims to enhance an understanding of the business of mining.  Use will be made in the workshop sessions of the IC-MinEval and IC-CoalEval software provided by IC-FinEval,  Excel™-based spreadsheet programmes automating all stages required to produce models for a wide range of mineral projects.

The course will be delivered by Dennis Buchanan, Emeritus Professor and Senior Research Fellow at Imperial College London.  He is also Director of the MSc Metals and Energy Finance programme, a joint Imperial College Business School and Faculty of Engineering degree. The theme of Valuation of Mineral Projects was launched in 2006 by EduMine and has run successfully up to three times a year since then.  The course content for the June 2012 delivery is based on these previous courses but has been comprehensibly revised.  The first day will be covering the principles of discounted cash flow modelling and is optional. Delivery over the following three days will assume that delegates are familiar with the techniques.

Full use is made of workshop session as an integral part of the course delivery. Particular attention is given during the workshops to demonstrating how financial models should be set up with a rate of production appropriate to the size of the resource.  Realistic associated capex and opcosts  are determined with reference to CostMine.  The circumstances in which it is appropriate to set up models based on a straight discount rate basis compared to including debt are outlined. In the latter case the approach to determining the appropriate level of debt will be explained. 

Analysis will be undertaken during the workshop sessions on the financial performance indicators generated and there will also be an indication of the valuation that could be place on the asset. Sensitivity analysis will be undertaken on key variables. Particular attention will be given to why sensitivity on variables such as mining dilution should not be considered.  Consideration will also be given to the role of financial models in identify those technical variables that have the greatest impact on financial performance and then back-engineering that to the corresponding technical risk.

Discussion will be aimed at enhancing the level of understanding demonstrated in the analysis of the financial performance indicator generated and the degree to which conclusions can be supported by the assumptions made.  

Pre-Course e-Learning

Prior to the course, registered delegates have access to the online e-learning material consisting of an introductory course titled An Introduction to Modelling Metal Project Finance.

UBC Certificate in Mining Studies

This course qualifies for three and a half days of short course credit for the UBC Certificate in Mining Studies, a continuing education initiative by the Norman B. Keevil Institute of Mining at the University of British Columbia. more details »

Continuing Professional Development (CPD)

This course meets the requirements for formal CPD activity for most Canadian provincial associations and US state boards and may contribute the equivalent in hours towards your CPD requirement. more details »

Who Should Attend

The course will be of particular interest to mining analysts, fund and asset managers, bankers, engineers responsible for development planning, exploration managers and other specialists in the valuation of mineral projects. It will be of interest also to industry-based geologists and engineers.

Previous courses presented in Vancouver, London, Johannesburg and Stockholm have received wide participation from major finance and mining companies, providing an opportunity to bring together professionals with common concerns in this area. With the emergence of private equity funds aimed at financing junior mining, the course will be relevant to entrepreneurs needing to understand the qualifying framework that such funds use in evaluating projects.