Technical and Financial Evaluation of Mineral Projects

16 - 20 April 2012

Course Information

This course is being held at Wits Business School, Johannesburg, South Africa. 

Techniques for the minerals industry to measure risk, uncertainty, the cost of capital and project performance.

A short course for all professionals involved in mining finance and the evaluation of mining projects. Of interest to professionals active in mineral exploration, development and production, and also those in the financial community involved in offering services and providing funding options to the minerals industry.

A demonstration licence for the mineral projects appraisal software IC-MinEval will be supplied to delegates for the duration of the course.

Background

The new Mineral and Petroleum Resources Development Act, 2002, has profoundly changed the mining investment landscape in South Africa. While this has given rise to fresh commercial opportunities, these have to be matched with suitable funding options.

For Junior companies with exploration assets, these include private placements, establishing strategic partnerships with the Major companies and Initial Public Offerings through the local and international securities exchanges, notably AIM, TSX and ASX. Reliable but flexible valuation techniques are needed to determine accurately the strategic importance of a property.

Where advanced exploration has allowed a deposit to be classified as an indicated resource, the techniques of discount cash flow modelling can be used to value a project. Mechanisms for accommodating Black Economic Empowerment (BEE) within the provisions of the Mining Charter also need to be considered.

Financial models of these multi-partner projects need to be designed so that the relative return to different investors in a joint venture can be determined. It is particularly important to determine the impact on a project of a free carry for the BEE partner.

Many BEE deals were financed with debt with the expectation  that payment of interest and repayment of the loan would be financed through dividends payments and rising share prices. As commodity prices continue to fall this model is no longer working and the value of assets will need to be written down and re-financing considered.

Course Objectives and Structure

The aim of the course is to develop strategic approaches for evaluating projects at the prefeasibility stage. Delegates will be provided with the training needed to establish an independent valuation of mineral projects.

The course also aims to cover the underlying accountancy, financial and technical principles which apply to mineral projects, and to demonstrate how these influence the way a financial model is constructed.

Particular attention will be given to the treatment of the key independent variables, such as grade, and dependent variables, such as grade-tonnage relationships, and the way these influence the rate of mining, associated costs and optimisation of the net present value of a project.

The distinction between technical appraisal and financial engineering will also be addressed and the reason why discounted cash flow models need to be integrated correctly into financial accounts explained. This will be linked to concepts of shareholder value and the role of gearing to maintain an efficient balance sheet.

Pre-course e-learning

To enable delegates to derive maximum benefit from the live sessions, prior to the course registered delegates will be provided with an internet URL, user name and password.

This will give them access to the virtual learning environment for the course. Important course information will be available here including joining information, course materials and the ability to post details about themselves.

For a limited period it will also enable them to access an EduMine e-Learning module, which will provide them with an introduction to modelling pro ject finance and cover the critical issues associated with the debt financing of mining projects.

A fully integrated IC-MinEval generated spreadsheet model is included in the module, together with inte ractive review sessions.

To access the e-Learning module, the cons ent of delegates is required to forward their e-mail addresses to EduMine. The details are used only to activate logins and will not be shared with any other parties.

I C- MinEval

In the workshop sessions use will be made in the workshop sessions of the IC-MinEval software provided by IC-FinEval (www.ic-fineval.com), an Excel™-based spreadsheet programme automating all stages required to produce models for a wide range of mineral projects.

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 Business School’s internet.

They will need t o have administr ative 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 supp ort.) Delegates all have access to the functionality of IC-MinEval through SaaS for a further four weeks after the cour se. Acces s beyond that w ill be available on subscriptions.

Participants will be able to retain digital copies of the spreadsheets that they generate during the course. IC-MinEval is an Excel™-based spreadsheet programme which automates all stages required to produce models of a wide range of mineral projects.

It produces a Balance Sheet and Profit and Loss account from the cash flows, with tax provisions linked to the Profit and Loss account.

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.

Who Should Attend?

The course will be of particular interest to all professionals involved in mining finance within the minerals industry and related financial services and investment communities.

This includes those associated directly with the appraisal, financing, and developing of mining projects such as geologists and engineers with a technical orientation, as well as financial services sectors including mining analysts, fund and asset managers, brokers, investment bankers and a ccountants. Pr evious co urses have attracted participants with technical and financial backgro und s in equal proportions and provided an opportunity to duplicate, in the class room, the interdisciplinary exchanges that form the basis of all succesful projects.

With the emergence of private equity funds aimed at financing the Junior mining sector, the course will also be of interest to entrepreneurs with no formal training in the technical aspects of the minerals industry but needing to understand the qualifying framework for selecting good projects.

Previous Comments from Past Participants:

"In my view, an excellent course with a good balance.  The informine/ MinEval software is an excellent resource with a practical application."

"Truly, it was an excellent course."

"Thank you! Most valuable."

"Excellent organisation, arrangements and contents."

"Meeting Dennis and the interesting mix of participants on this course was a great experience.  He is passionate about his course and a rare expert."