Introduction

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.

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.

Course Content

Economic Evaluation and Optimization consists of 10 viewing sessions of 30 - 60 minutes each with supporting figures, tables, examples, appendices and interactive course reviews. Course duration is equivalent to approximately 8 hours of viewing content. The content of this course is taken from a paper published in Mineral Processing Plant Design, Practice, and Control published by the Society for Mining, Metallurgy, and Exploration, Inc. (SME) (http://www.smenet.org).

Learning Outcomes

1. Discuss the discounted cash flow (DCF) method, net present value (NPV), internal rate of return (IRR) and their application to mineral projects.
2. Discuss the application of DCF methodology to optimization of mineral projects.
3. Discuss the application of DCF methodology to selection of mineral project alternatives.
4. Apply the knowledge gained to practical economic evaluation and financial analysis of mineral projects.

Duration: 8 Hours

Category: Financial

Level: Intermediate