I’m needing to brush up my modelling skills a.s.a.p. and happy to hear anybody’s advice. Scared I’m going to sink and not swim and look like a complete fool. I’m about to take ownership of an existing corporate financial model and I need to be able to manage and develop it. It will have around 10 mining assets feeding through to one main model I’m guessing. I’ve done a couple of courses on fin modelling and doing my level 1 CFA. I’m surrounded by them and know how to read one but haven’t actually constructed one. So if you think I’m totally screwed please help me out! Thanks
are you needing to perform a financial analysis on mining projects or statistical analysis on mining projects? i can help with financial analysis of most common resources but i’m no P.Geo.
Appreciate the offer of assistance!! To be honest I dont yet know the finer details but I’m not a mining engineer or a geo so they can’t expect me to pull a rabbit out of the hat on that one! It is working within the treasury group so I guess just financial for the time being. Where can we start! Thanks
so you mean you want to start from the very beginning? well. many places to start. you’re either going to need any available feasiblity (FS) and pre-feasibility studies (PFS) or preliminary economic assessments (PEA). if the companies have any of the above, your job is going to be much much easier because most of the model is done for you. you would just have to replicate and adjust for any changes to project cost and update selling prices for all mined goods. if your projects have feas and pre-feas, the most difficult task you will have is determining your ~5 year or so price forecast for each material and then establishing a realistic/conservative LT price estimate. i could help you with price forecasting for most metals. if you don’t have any studies or assessments to work off of, then it becomes quite difficult. you will have to make some major guesstimations regarding mining rate per day and total resource base, especially if the resource is open in any direction. if this is the case, you would have to take it to a very knowledgeable person to find a comparable mine which has a PEA, PFS, or FS and use that PEA, PFS, or FS to help model the mine that does not have a model built for it. i could help with this but using the comparable method is never perfect. that said, a mine w/o at least a PEA is valued at maybe 20% of NAV so that discount takes into account any changes to the model as details become more clear. so, hopefully, most of the mines you’re looking at have at least a PEA available…
One question about the mining industry and more specifically about your role : is it non-recourse finance, i.e. you get financing specifically for your project ? If so then your model’s goal is to calculate your project equity’s IRR under a specific financial structure and assumptions. If so I could maybe give you tips, since it would be relatively similar to what I do.