The predominant economic evaluation technique for a mineral project, from pre-feasibility study stage to operating mine, is the discounted cash flow (DCF) method. A DCF evaluation will include a detailed year-by-year cash flow projection spanning the life of the mineral reserves plus the DCF metrics of net present value (NPV) and internal rate of return (IRR). DCF methodology is accepted by industry, the financial community and regulatory bodies.
This course examines the requirements, practice, and application of DCF methodology, as well as insights into the potential pitfalls to be found in such evaluations. Principal course topics include:
• Discounted Cash Flow
• Net Present Value (NPV) and Internal Rate of Return (IRR)
• Determination of Discount Rate
• Metal Price, Inflation, Debt and Taxes
• Targeting, Scoping and Ranking
• Optimizing Production Rate and Project Size
• Project Expansion Analysis
• Trade-Off Analysis
• Equivalent Annual Cost Analysis
The course includes practical applications of DCF methodology, with examples, to project evaluation, mineral process selection, process optimization, project expansion, selection of equipment and comparison of alternatives.
Who Should Attend?
This course is designed for an audience of mining professionals and managers who require a practical understanding of economic evaluation and financial analysis methods and their application to mineral projects.
Introduction to economics of mineral exploration
Measures of natural resource scarcity and classification of mineral resources
Nature of mineral rents and the mineral industry cost curve
Economics of exhaustible resources and scarcity
Marginal analysis of mineral operations
Optimal rate of mineral depletion and the optimization of resource allocations
Natural Resource Accounting
Intertemporal equity, conservation, and efficiency
Effects of technology and investments under uncertainty
Economic growth and sustainable development.
The discounted cash flow (DCF) method, net present value (NPV), internal rate of return (IRR) and their application to mineral projects.
The application of DCF methodology to optimization of mineral projects.
Discuss the application of DCF methodology to selection of mineral project alternatives.
Apply the knowledge gained to practical economic evaluation and financial analysis of mineral projects.
Recognize the theory and requirements of project finance modelling based on spreadsheets.
Course material provided.
All lectures are in colorful presentation
All lectures are interspersed with interactive discussion
All lectures include group discussion, case history and exercises