Financial Modelling for Mining Projects

OVERVIEWCOURSE OUTLINEHOW THE COURSE IS DELIVEREDREQUEST IN-HOUSE

Build a Mining project finance model from scratch. Develop a best-practice financial model and optimize it for both debt and equity investors for a project finance mining deal. Participants must have basic knowledge of Microsoft Excel. If joining online, you will need 2 screens preferable one with Microsoft Excel, the other for following the instructor.

Who should attend?

The course is suitable for for the following;

  • Analysts, associates & vice presidents at banks, funds, investors, developers, and operating entities looking to standardize approaches to modeling or solve new problems
  • Mining industry executives who are  looking to improving  their skill-set in financial modelling for mining projects.
  • New professionals in the mining sector, who wish to gain a greater understanding of financial modelling for mining projects.
  • Government officials who desire to understand the inner mechanics of mining project financing and how risks are allocated, from a financial modelling perspective.
Project finance introduction

Introduction to project finance
Typical investment structures
Tax and legal implications
Overall timeline and cashflow relationships
Major contracts and risk vs reward
Roles of different parties in the deal
Project finance term loans

Impact of leverage on a deal
Types of lenders and their mindset
Appropriate discount rates and interest repayments
Principal repayment options
Debt service cover ratio (DSCR)
Sculpting and sizing debt
Cash sweeps & mandatory repayments
Loan life cover ratio (LLCR)
Reserve life cover ratio (RLCR)
Understanding a Facility Agreement
Project operations

Project lifecycle from PFS to financial close
Common mining operations and various products including
Strip ratios, ore vs waste
Mine reserves
Mining and milling processes and financial calculations
Calculate grades, recoveries, and yields
Stockpiles for high and low-grade materials
Inflation calculations
Understanding:
Off-take Agreements
O&M Agreements
Project cashflows

Selling product
Spot markets
Hedging (forwards, puts, calls)
Off-take
Costs
Mining
Processing
General and administrative
Transport and insurance
Deferred costs
Working capital
Foreign exchange risk and exposure
Waterfall and cashflow summary

Typical waterfall structure vs cashflow statement
Accounting vs cash issues
Global differences in calculating the waterfall
Accounts required and the role of the administrative agent
Develop cashflow forecasts for different reserve levels and price forecasts or financial structure
Develop upside and downside scenarios and sensitivities with data tables
Debt service reserve account (DSRA)

Requirement of (and implementation of) a DSRA
Impact of the DSRA on debt ratios
The debt service facility as an alternative
Develop model checks to ensure compliance with loan documents
Construction phase

EPC vs EPCM contracts in mining
Review of construction term sheet
Completion testing required
Value added tax challenges and solutions
Sources and uses
Model construction costs and understand funding challenge
Calculate total funding required
Discuss alternative drawdown orders
Depreciation and tax

Straight line, reducing balance, life of mine, and MACRS depreciation
Model from EBITDA to EBT
Thin capitalization constraints on tax deductibility
Tax losses carried forward
State and local taxes
What happens when tax is ahead of CADS
International tax considerations (i.e. WHT, tax treaties)
Complete post tax valuations
Returns

Returns required for lenders, equity, and developers
Cap rate compression and the value in selling your project, calculating terminal values
Adding subordinated debt to increase returns (and risk) or for funding shortfalls
Valuation comparables
Real vs nominal valuations
Core outputs

Comparison of accounting and tax depreciation
Developing an income statement and balance sheet
Converting quarterly calculations to annual outputs
Calculating working capital and stockpile inventory
Add deferred taxes to your model
Outputs required for an investment decision
Modeling quality checks

File structures, version control, sign-off protocols for a deal model
Data books
Tracking changes in Excel models
15 model checks required
How do I review a model?
Optimizing a deal model

Solve the price required to achieve a hurdle rate
Size the debt required in operations and construction
Introduction to VBA for project finance
Running scenarios with VBA
Simplifying alternatives to avoid VBA
Summary of core risks with analysis

Option of joining In-person, or online, with live instructor.

Participants will receive a thorough training on the modules covered by the seminar outline with the course leader utilizing a variety of proven adult learning teaching and facilitation techniques. Seminar methodology includes classroom style with highly interactive, exercise and case studies the training course will be run using PowerPoint slide and video.

Inquire Now / Request In-House

Course Information

Estimated Time: 4 DAYS

Course Instructor

Owi_ghola Owi_ghola Author
This course does not have any sections.

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