Introduction

A tenet of investment is that if the risks of an investment are high, then the investor should be compensated for assuming the risks by a high potential return from the investment. However, quite often the risks associated with an investment are not known or understood. The results vary but may include an investment evaluation that is not representative, a bad investment decision, and low returns or even losses. Inadequate technical or financial information is the main reason risks are not taken into account or are misunderstood. Unfortunately, lack of such information is a common situation in mining and other large industrial projects. No amount of investment evaluation or analysis can compensate for lack of information.

If the risks are known and can be characterized in some way, methods of investment analysis can be used to provide a quantitative assessment of the risks. One goal of this course is to describe methods for risk quantification, their advantages and limitations, and to give realistic (if not real) examples of their application. Fortunately these methods are simple so that complete evaluation of an investment is (or at least should be) a simple process.

Topics covered in this course include:

• Revenues, Costs and Cash Flows
• Discount Rates
• Project Financing
• Metal Prices and Markets
• Mining Costs
• Uncertainties
• Real Options

Course Content

The course comprises 22 learning sessions, each of 30–60 minutes duration, plus supporting figures, tables, images, references, case studies, appendices, Excel spreadsheet examples and interactive reviews that confirm achievement of the learning objectives. The total duration of the course is estimated at 18 hours. 

Learning Outcomes

1. Discuss revenue, cost, cash flow, discount rates, methods of financing, metal prices and metal contracts in the context of mine project economics.
2. Describe methods for modeling metal prices and mine costs, and their application to project economics.
3. Identify methods for risk quantification, their advantages and limitations, and their application to project economics.
4. Explain the definition and valuation of real options with respect to mine projects.

Duration: 18 Hours

Category: Financial

Level: Intermediate