Schedule

Times

Topics

13.00 -14.00

1. Introduction.

Principles of DCF Modelling. Discount rate. Net Present Value. Internal Rate of Return. Payback Period and Choice of Discount Rate. Impact of different discount rates over time. Cash flow for a mineral project. Scenarios illustrating the range of economic performance indicators. Case history of gold operation.  Setting up base case. Nominal versus real.

14.00 – 15.00

2.1 Valuation of Companies

Terminology. Share performance metrics. Alternative methods – DCF, comparable transactions and appraised value method. Treatment of sunk capital. Acquisition cost. . Setting share price, share splits and dual-class shares. Capital Raising – dilution vs accretion. Share repurchase. Accounting impairment.

2.2 Case Study – Single Project Copper Company

Variables and financial performance indicators. Sustaining and sunk capital. Share price movements. Share performance metrics. Quantitative finance. Grade-tonnage relationships and pit optimisation. Role of debt. Multiple separate mining operations.

15.00 – 16.00

3. Analysis of Risk and Uncertainty – Workshop Session

DCF exercise based on annuity tables. Review of spreadsheet-based solution.

16.00 – 17.00

4. Analysis of Risk and Uncertainty

Sensitivity analysis. Application to Monte Carlo simulation techniques. Treatment of multivariant systems. Brownian motion and probabilistic modelling. Crystal Ball modelling of gold project. Precision versus accuracy.

Times

Topics

13.00 -14.00

5.  Project Finance and the Cost of Equity

Sources of capital funding. Weighted average cost of capital (WACC). Integrated economic and accounting model for a simple gold project demonstrating the interrelationship between DCFs and the financial accounts. Capital asset pricing model. Optimisation of gearing. Project Finance cover ratios

14.00 – 15.00

6. Demonstration of IC-MinEval.

Treatment in the financial model of profits after tax before interest (ATBI), profit before interest and tax (PBIT),  profit after interest before tax (PAIBT) (and profit after interest and tax (PAIT).

15.00 – 16.00

7. Value Creation in Mineral Projects

The cycle of value creation in mineral projects. Exploration Stage. The pyramid reflecting the evolution of a gold mineral exploration and evaluation programme. Drivers – Commodity Prices. Resource Base and Asset Life – Mineral Resources. Synergies and Portfolio Optimisation. Single project mining company stages of development and funding options and sources of capital. Funding Options for Mineral Projects  - Pre-Initial Public Offering, Listing, Joint Venture Agreement and Project Finance. Multiple-partner modelling.

16.00 – 17.00

8. Resource Evaluation

Sampling. Diamond drill rig, crowns, core and core storage. Process Mineralogy. Concepts around Geological Continuity. Polygons of Influence and Inverse Distance.

Times

Topics

13.00 -14.00

9. Resource Evaluation

Geostatistical Methods Experimental semi-variogram. Variogram showing the relationship ỵ(h) which relates the semi-variance of sample differences to distance between samples. Resource block model. Grade-tonnage relationships. Reserve and Resource Definitions. Drill spacing. Evaluation versus Production. Break-even and cut-off grade.

14.00 – 15.00

10. Metals & Energy Project Appraisal & Finance – Introduction.

Nomenclature of documentation generated  in mineral project development. IPO Prospectus, SEDAR  and NI 43-101.Preliminary Feasibility Study (PFS) - Elements and Characteristics. Cost Estimation. Relationship Cost to Capacity.  Asset Optimisation. Full Technical Feasibility Study (FTFS)– Elements and Characteristics. Engineering Design Stages . Feasibility Studies  and the Information Memorandum. Construction. Construction Monitoring. Production Monitoring. Project Finance Parameters.

15.00 – 16.00

11. Financial Engineering.

Decision Trees. Deferral, Expansion, Contraction, Care & Maintenance and Abandonment options. Application of the Black & Scholes option pricing model. Oil sands case study. Binomial Lattices.    Tax and Company Structure. Mineral taxation regimes

16.00 – 17.00

12. Nickel Sulphide Open Pit Mine - Project Finance Case History.

IC-MinEval-based workshop session. Open pit nickel mine. Sample of DCF model worksheet. Annual cover ratios. Scenario analysis. Optimisation of gearing. Cost estimates. Debt performance indicators (debt service coverage and ratios such as loan life, project life, reserve tail, interest cover, principal cover and residual cover.).  Different stakeholders. Reserve tail. Convergence of technical and financial risk. Multiparter scenario analysis – determining relative return for different stakeholders as a function of investment contribution. Hedging provision and impact of lost opportunity if metal prices increase. Sensitivity Analysis. 

Times

Topics

14.00 – 15.00

14. Case History – Diamonds.

Geological settings and pricing. Alluvial deposit case history. Evaluation of projects. Instability of DCF models. Primary kimberlitic projects

15.00 – 16.00

15.  Share Structures

Deal structure, Share price and stakeholder valuations associated with the progression from a private placement to undertake exploration through to an Initial public offering to fund evaluation drilling. Treatment of options purchased for below an issue price and then distribution of shares held by stakeholders when exercised if this is below an IPO price. Consideration of monies added to the company treasury during corresponding funding stages.

Spreadsheet-based workshop session.

16.00 – 17.00

16.1 Case Study - Nickel Laterite Project at the Development Stage – Rights Issue

Nickel laterite deposits. Reaction of olivine to goethite. Murrin Murrin. Case study. Statement of equity. Share performance metrics. Technical risks.

16.2 Case Study – Capital Raising for a Distressed PGE Mining Operation

Statement of equity as at 1st October 2012.  Rights issue announced on 9th November 2022. Share performance metrics after rights issue. Statement of equity from rights issue to take over

Times

Topics

13.00 -14.00

17. Constraints on Mineral Resource Development

ESG – Environmental impact, social license and corporate governance.  Resource nationalism. Assessment. Case studies. Tailings dams.  Occupational Health and Safety. Cost of Environmental Compliance and Closure Provision. Site Visits and Due Diligence. Mining Legislative Framework. Sustainable Development and the Moral Case for Mining. Multiple partner modelling.

14.00 – 15.00

18. Net Smelter Returns

Off-take agreements and toll smelting.  Treatment Charge, Refinery Charge (TC/RC) and Price Participation (PP). Case histories. Gold project. Lead, zinc silver project

15.00 – 16.00

19. Andean Skarn Silver, Lead Zinc Projects

IC- MinEval-based workshop session. Valuation of a 22 Mt silver-rich deposit with associated Zn and Pb mineralisation. Determination of the cost of equity as a function of the change in gearing.  Optimisation of NPV. Optimisation of NPV. Debt performance indicators (debt service coverage and ratios such as loan life, project life, reserve tail, interest cover, principal cover and residual cover.)

16.00 – 17.00

20. Metals streaming

Comparison between Different Sources of Funding for the Development of a Mining Project. Case History -Aljustrel copper-zinc-lead-silver in Portugal. Metals Streaming Companies.