7 - 11 December 2020

Course details

Valuation of Mineral Projects Based on Technical and Financial Modelling

As a direct result of the impact of COVID-19, Edumine is delivering its well established “Valuation of Mineral Projects Based on Technical and Financial Modelling” as a distance learning initiative covering both technical appraisal and financial evaluation of mineral projects.

Market turbulence significantly affects the mining industry. While the intrinsic value of a mineral project is still a key consideration, understanding the interrelationship between technical and financial risk to truly understand the long term value of an asset, helps companies make better investment (or divestment) decisions. Companies that are able to secure debt finance for both development and acquisition of advanced projects have greater strategic flexibility. Understanding how debt impacts the valuation of projects allows for 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.

This course is for professionals with a basic to intermediate understanding of the principles of the accounting cash flow model that wish to gain expertise in quantitative finance in the context of mining. Actual operating mine valuations are a central focus of the course. To gain the most out of the course, attendees should have had some exposure to the technical aspects of minerals and mining.

Attendees are expected to have laptop computers for this course. Workshop sessions are an integral part of the course delivery. Use will be made of the IC-MinEval software, which automates the generation of Excel™-based spreadsheets to produce models for a wide range of mineral projects. These models can be used independently of the software once the course is completed.


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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.

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.