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Mineral Economics & Project Modelling

A financial & economic bridging course for mining professionals

2-Day Training: A financial and economic bridging course for mining professionals. A practical & comprehensive introduction to accounting & financial decision making in the mining industry designed to enable technically trained employees to evaluate project investment decisions, build effective financial models & communicate effectively with the finance professionals.

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overview

Key Learning Objectives

  • No longer be at the mercy of financial jargon
  • Build project evaluation and financial statement forecasting models
  • Understand and interpret balance sheet and profit and loss statements
  • Discover the distinction between cash flow and profit in mining
  • Understand Free Cash Flow and develop share price valuations using an excel based forecasting model
  • Develop effective and practical financial modelling techniques
  • Learn the difference between cash costs and full costs in mining
  • Learn how to manage for increased shareholder value
  • Develop the confidence to have an effective conversation with corporate finance and accounting staff
  • Improve your career prospects by moving from being a technician to a manager

About the Course

This course is specifically designed for professionals with technical training who aspire to move, or have moved, into a management role within the mining industry. A high level of technical expertise is no longer sufficient for superior management performance.

Technical professionals who wish to succeed in management are required to develop skills beyond their core functional knowledge and fully understand the finances behind informed and effective decision making.

The course begins with an introduction to accounting statements and the key performance measures that determine a company’s financial performance. The course then moves to the fundamentals of financial theory and its practical application in the context of modelling project investment decisions. The course is delivered in a ‘hands on’ style and participants will gain firsthand experience at building flexible and robust financial models.

This course does not endeavour to turn the delegates into accountants – rather it will give participants the ability to converse with their company finance personnel, know what questions to ask of their accountants and financial analysts, understand and model project investment decisions, and be able to interpret and act on the information contained in company management reports.

Who Should Attend

This hands on course is specifically for all those working with the mining industry who would like more confidence with finance and economics fundamentals of mining companies and the mining industry

  • Engineers and scientists
  • Geologists and metallurgists
  • Mine managers
  • Lawyers and HR professionals
  • Accountants and business analysts
  • Any technically trained manager

trainer

James Hay

Testimonials

Over the years I have attended many training courses provided by [Informa Corporate Learning]. I have always found the course content to be relevant and accurate and the course facilitators to be leaders in their field
Analyst, ENI Australia Ltd.

Excellent teacher – most knowledgeable and able to draw on vast relevant industry experience and knowledge
Senior Geologist, Rio Tinto

Comprehensive overview of everything a beginner needs to know. Cash versus profit analysis. James is a very clear communicator with a wide range of experience
Geologist – Minerals Exploration, NZ Ministry of Economic Development

Very clever and spontaneous. He could answer any questions and used great examples of real situations
Executive Director, Department of State Development

Course Outline

Introduction

  • Course overview and objectives
  • What financial issues are intrinsic to mining companies?
  • What drives value in the mining industry?
  • The financial statements of a mining company
  • The balance sheet
  • The profit and loss statement
  • The cash flow statement


Examining mining company financial statements

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

Exercise
Review the financial statements of a listed mining company. What are the key measures of performance that can be taken from the statutory accounts?


Cash versus profit

  • The difference between cash flow and profit
  • The importance of cash flow to shareholders
  • Using financial statements to forecast future cash flows


An introduction to financial theory

  • Risk versus return
  • The time value of money
  • Sources of capital
  • The cost of capital
  • The capital asset pricing model
  • Discount rates and hurdle rates

Valuation and decision making

  • Net Present Value (NPV)
  • Internal Rate of Return (IRR)
  • Capital efficiency ratios
  • Payback period
  • New mine valuation versus reserve acceleration economics

Exercise
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

Exercise
Modelling depreciation and taxation in excel

Building flexibility into the mine valuation model

  • Structuring an economic model
  • Building in checks to avoid errors
  • Creating scenarios

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

Inflation

  • Real and nominal cash flows
  • Inflation impacts on prices and costs
  • Building inflation impacts into the 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
  • Simulation and Monte Carlo analysis
  • Understanding and communicating risk

Financial Statement Forecasting

  • Creating Balance Sheet and Profit and Loss forecasts from our project evaluation model
  • Understand the concept of Free Cash Flow
  • Use the forecasting model for share price valuations

Exercise
Complete our model by creating a profit and loss and balance sheet forecasting tool that reflects the different scenarios in available in the model. Use this model to estimate an example company share price and compare to the current ASX price

Course review and summary

On-site & in-house training

Deliver this course how you want, where you want, when you want – and save up to 40%! 8+ employees seeking training on the same topic?

Talk to us about an on-site/in-house & customised solution.

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