Guidelines to Exploration and Mining Investment, Stockholm, Sweden

30 August - 2 September 2011

Background

While the key asset for the minerals sector is the un-mined mineralisation associated with the deposit, the value to the company can only be released if exploration is able to identify extensions of the mineralisation and mining and processing can be undertaken efficiently and at minimum cost. This involves consideration of grade control procedures and the approach to metal reconciliation from bock estimates of in situ grades through mining dilution, determination of head grades, the proportion of production tied up in stockpiles and then plant recovery. It follows from that that any interrelationships with capital investment decisions aimed at improving grade control and reducing operating costs would always be important. This is particularly the case in the Scandinavian countries which have benefited less from increases in dollar metal prices over the last year against escalating local currency-based Capex and Opcosts. This has encouraged the implementation of mechanised mining techniques but does require close co-operation between a parent company and the operating division in undertaking technical and financial appraisal of new investment options.

Securing finance (whether equity or debt) requires all the relevant technical, operational, permitting and financial components to be presented in an integrated and transparent manner. For projects to be able to secure equity funding they normally require the inclusion of a resource that can be placed into one of the internationally recognised systems of classification. To take a resource into the reserve category requires the development of a prefeasibility or full technical feasibility study. This would expect to add significant value to a project which might otherwise comprises mainly exploration potential as it permits the generation of a discounted cash flow financial model. Where the NPV and IRR generated can be shown, through sensitivity analysis, to be robust this not only enhances the valuation of the project for the equity market, it can also be used to secure project finance.

Course Structure

The aim of the course is to provide a guide to understanding the main factors involved in securing the financial support for mining projects through equity, debt, or entering into a joint venture. This involves addressing the underlying technical principles, applying these to mineral projects and demonstrating how these influence the financial modelling. Particular attention will be given to the treatment of key independent variables, such as grade and metal price, dependent variables, such as grade-tonnage relationships, and the way these influence the rate of mining, associated operating and capital costs, and the optimisation of the NPV of a project. The structure of joint ventures and the role of tax models in enhancing the features of a mineral project will be outlined.

The course was launched in Stockholm in November 2004 and was re-delivered annually since then. Each delivery was fully subscribed and was well received by delegates.

Who Should Attend?

This course will be of particular interest to all professionals who are involved in the funding of minerals projects from exploration through to development and making investment decisions in operating mines. The course will also be of interest to those based with for financial institutions as mining analysts, fund and asset managers, or securities and corporate finance investment bankers.

Pre-course E-learning

To enable registered delegates to derive maximum benefit from the live sessions, prior to the course they will be provided with an internet url, user name and password. This will give them access to the virtual learning environment designed specifically for the programme, where important course information will be available. This includes joining information and easy access to the different interrelated components of the course. Here all the course material covered in the live sessions will be available prior to the start. It will also enable participants to post details about themselves and to be involved in post course follow-up.

For a limited period, participants will be able to access an EduMine e-Learning module through the VLE. This gives an introduction to modelling project finance and covers the critical issues associated with the debt financing of mining projects.

IC-MinEval

Use will be made in the workshop sessions of the IC-MinEval software provided by IC-FinEval, Excel^TM-based spreadsheet programmes automating all stages required to produce models for a wide range of mineral projects. IC-MinEval produces a Balance Sheet, and Profit and Loss account from the cash flows, with tax provisions linked to the Profit and Loss Account. The cost of debt is calculated, as is the weighted average cost of capital and the cost of equity. Output modules include the base case discount cash flows, as well as key financial ratios and performance indicators such as NPV, IRR payback and maximum cash exposure. Sensitivity analysis can be undertaken on key variables.

The functionality of IC-MinEval will be delivered over the internet through the Software as a Service (SAAS) system with InfoMine (http://software.infomine.com/)
Delegates will be expected to have their own laptop computers available and will be provided with wireless access to the College's internet. They will need to have administrative rights for their laptops, as there will be the need to install ActiveX to access the system. Delegates will be given access to SaaS a few days before the start of the course. (Delegates with AppleMac and Firefox internet browsers may need some support.) Delegates all have access to the functionality of IC-MinEval through SaaS for a further four weeks after the course. Access beyond that will be available on subscriptions.

Previous Comments from Past Participants:

"Very good course, with a very good presenter of whom has a huge knowledge of mining."

"Very useful."

"A very good introduction."

"I'm extremely pleased with the course.  It exceeded all my expectations."

"Very useful, I'd recommend the course!"