Valuation of mineral projects, Canada
9 - 12 April 2019
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 undervalue the true long-term worth of assets, which is then reflected in low share prices, strategic planning can identify opportunities. The ability to secure debt finance for both development and acquisitions for advanced projects allows greater strategic flexibility. Understanding how this impact 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.
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 current delivery is based on previous courses with significant additions and upgrades, including in-depth coverage of discounted cash flow modeling and its application.
Course aims and structure
This course aims to enhance an understanding of the business of mining. Actual operating mine valuations are a central focus of the course.
The basics of quantitative finance and the key interface with the accounting cash flow model will be covered as part of the course. No prior knowledge is assumed but the treatment is intensive. What is assumed is that attendees have had some exposure to the technical aspects of minerals and mining.
Workshop sessions are also an integral part of the course delivery and use will be made in the workshop sessions of the IC-MinEval and IC-CoalEval software which automates the generation of Excel™-based spreadsheet to produce models for a wide range of mineral projects. These models can be saved as fully-linked workbooks and continued use is quite independent of IC-MinEval or IC-CoalEval. Delegates can generate their own models which can be preserved indefinitely and having normal excel functionality.
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 placed 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.
In addition to the presentation slides, attendees will receive a copy of the book Metals and Energy Finance, authored by Prof. Buchanan.
Participants are expected to have their own laptop computers available for this course.
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 also be of interest to industry-based geologists and engineers as well as government officials.
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.
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.