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Course Outline

  Introduction Download Course Brochure
  • Course overview and objectives
  • What financial issues are intrinsic to mining companies?
  • What drives value in the mining industry?

Sources of competitive advantage in mining through the value chain

  • Exploration
  • Appraisal
  • Development
  • Production
  • Processing
  • Logistics
  • Marketing

A review of financial theory

  • The cost of capital
  • Discount rates and hurdle rates
  • NPV, IRR, VIR, payback

Building a simple mine valuation model to determine after tax cash flows in order to understand the basic concepts of discounted cash flow analysis


Taxation in mining

  • Taxable income
  • Investment incentives
  • Treatment of tax losses

Modelling depreciation and taxation in Excel


Building flexibility into the mine valuation model

  • Structuring and economic model
  • Creating scenarios
  • Reserve scenarios, price scenarios

Enhance our model so that we can switch between different assumptions and cases: proved vs probable, high versus low prices and costs



  • Real and nominal cash flows
  • Inflation impacts on prices and costs
  • Building inflation impacts into our model
  Project financing and cash flows to equity
  • Building loan accounts into the model
  • Cash flow to equity method of valuation

Exercise: Complete our model by building in inflation impacts and a loan account


Sensitivity analysis

  • Risks and sensitivities
  • Using ‘What if’ analysis
  • Simulation and Monte Carlo analysis

Royalties and rent taxes

  • What is economic rent
  • When/why do mining projects create ‘super profits’?
  • Ad valorem royalties
  • Minerals resource rent taxes
  • Impacts on project value and life

Exercise:Understanding the impacts of royalties and rent taxes on project economics


Examining mining company financial statements

  • Capital costs and operating costs
  • Exploration accounting
  • To what extent are mineral assets reflected on a balance sheet?
  • Depreciation and depletion
  • Provisions for remediation

Valuing a listed mining company

  • Estimating future cash flows from the accounting statements
  • Making judgements about revenues and costs
  • Adjusting for corporate costs and liabilities

Group Exercise:We will take a small listed mining company and on the basis of its publicly available information, build a valuation model and estimate the value of equity. Is it a buy or a sell opportunity?!

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