Project finance mining pdf

This mining project falls under category b2 project or activity 1a as per eia notifications 2006, 2009, 2011 and 20. I hope an ebook will be published asap because this handbook is a powerful tool in the daily project management business not only for me. How to build a financial model to value a mining project quora. Financial modeling for mining projects corporate finance. Mining schedule in inputs sheet foundation for stockpile calculations. These debt securities are issued by way of private placement or public offerings. Offtake agreements offtake agreements in project finance. The term project financing describes the various means that lenders use to finance a new project on a basis where repayment is expected only from the cash flow generated by the project. Convertible debt is usually unsecured and senior lenders regard it as near equity.

Learn the skills required to build an integrated financial model for a mining project in this handon training course from essential excel functionality to powerful commercial scenario analysis. The engineer, procure, construct epc model is an increasingly popular approach to oil, gas and infrastructure. The financial model of a project is one of the most important documents a mining company will submit as part of a package of documents to get a mining license in most mineralrich countries. Without exception, the first look that prospective project lenders get at.

Mining projects require a unique type of financial modeling what is financial modeling financial modeling is performed in excel to forecast a companys financial performance. Get the skills to develop robust financial models that can stand up to the scrutiny of any audience, from internal operations to bankers and jv partners. If you have a good project and are willing to follow the rules you can get funded. The char ts belo w demonstr ate the dif ference between public, corporate and project funding, using an example of a water treatment project. Typically, a costbenefit analysis is used to determine if the economic benefits of a project are larger than the economic costs. How to build a financial model to value a mining project. Offtake agreements may only be one document in a package of dozens of critically important project finance documents offtake agreements may be the most critical in terms of securing project loan approval.

Overview of the lifecycle of the model for a mining project, from pfs and bfs to financial close and operations. What follows are the typical phases of a proposed mining project. In 1995, bhappu and guzman surveyed 20 mining companies located in. Project finance mining journal the funding and investment. Mining project finance structures vary greatly depending on the underlying project, the sponsor behind the project, and the motivations behind the financing. Project finance is the financial analysis of the complete lifecycle of a project. Nautilus, a canadian company with headquarters in toronto, is jointly owned by several of the largest mining companies in the world barrick gold corporation, angloamerican, teck cominco, and epion holdings. Risk identification and allocation is a key component of project finance. Apr 22, 2019 project finance is the financing of longterm infrastructure, industrial projects and public services based upon a nonrecourse or limited recourse financial structure, in which project debt and. The book project management for mining is an excellent handbook for the wide range of mining projects. Mine project evaluation methods of cash inflows and the present value of cash 2.

I hope an ebook will be published asap because this handbook is a powerful tool in the daily project management business not. For these hours to appear on your certificate, you must. For a discussion of the documents typically entered into in a project finance transaction, see practice note, project finance. However, project financing is a specialised funding structure that relies on the future cash flow of a project as primary source of repayment, and holds the projects assets, rights and interests as collateral. When you value things you typically have three methods. Dec 03, 20 ive actually been through a few of these and agree with the majority of the answers listed here but for one fact. Types of project finance in the mining industry contd. Finally, the course describes how to both detect and prevent errors from occurring. Project appraisal is the due diligence conducted on sponsors, technical, market, environmental, financial, legal, and risk aspects, among others, of the proposed project. Comprehensive coverage of project finance news and analysis project finance mining journal the funding and investment initiatives across the mining sector page 2. Pdf financing and risk management of investments in mining.

The example used is an iron ore project however the same financial modelling principles can be applied to any mining project model. You have to make sure that the project will be completed in time and that you will not fall short when it comes to the budget allotted for the project. Worldwide, extractive industries account for 36% of the total project finance market, almost half the share of. Flexible and negotiable subject to clients preferences. In junior sponsor transactions, the completion guarantee is of relatively limited value, and lenders will therefore look to the contractors and contingent funding to cover the completion. It is the assessment of the viability of proposed longterm investments in terms of shareholder. Financial modelling for mining projects corality academy. We want good projects even in these challenging times. Project finance a primer on the project finance industry. Traditionally, project financing has been most commonly used in the extractive, transportation, telecommunications, and power industries, as well as for sports and entertainment venues. A tool for optimizing the financial benefits of the mining sector. Financing and risk management of investments in mining sector. The keys to project financial management the keys to project financial management michael mclin maxim consulting group this session is eligible for 2 continuing education and 2 contact hours. Stephen mullowney, pwccfs managing director of corporate finance commented, we are pleased to be working with tanzanian gold to arrange project mining financing of two gold mining operations.

Investopedia defines offtake agreements as contracts between the producers of a resource, in the case of project financing the producer is the project company, and a buyer of the resource, who is known as the offtaker, to sell and purchase all or substantially all of the future production from the project. Comprehensive coverage of project finance news and analysis mining journal an insight into the funding and investment initiatives occurring across the mining sector which are financing the mines. Financial modelling for mining projects corality financial. Financing mining projects funding for mining projects. Mining project finance is used to develop the exploitation of natural resources such as copper, iron ore, or gold mining operations in coun tries as diverse as chile, ghana and australia. Without exception, the first look that prospective project lenders get at the project is the presentation of project documents. Project finance structures p roject funding can be obtained from v arious sources. Equity capital is also harder to source but it can still be done if the project is exceptional. Temporary free access to in order to avoid any service disruptions due to the covid19 outbreak and ensure you are able to stay up to date with pfis coverage of the global project finance markets, refinitiv is providing free access to our online platform for all pfi magazine subscribers over the next two months. Project finance is the longterm financing of infrastructure and industrial projects based upon the projected cash flows of the project rather than the balance sheets of its sponsors. Definition of project finance the term project finance is used loosely by academics, bankers and journalists to describe a range of financing arrangements. The issuance of units comprising nonconvertible unsecured notes by mining companies is increasing but not yet common. Sustainable infrastructure is critical for addressing developmental challenges in emerging markets. Project finance the term project finance is often interpreted incorrectly as the generic financing of a project.

This practice note provides an introduction to project finance and covers 1 due diligence and bankability, 2 sources of finance for projects, 3 project risk and allocation, 4 types of project, 5 the main project parties, 6 the finance parties, 7 key finance documents, 8 key finance terms, 9 key project documents, 10 security. Our mining finance solutions provide new and used equipment financing. There are different phases of a mining project, beginning with mineral ore exploration and ending with the postclosure period. It is the assessment of the viability of proposed long. Overall, while wellwritten, wellpresented project documents ensure that lenders will have a generally favorable impression of your project, offtake agreements are. Many traditional traditional mining funders are, for all intents and purposes, out of the business right now. Jan 18, 2018 financial modeling of mining projects. Project finance is often more complicated than alternative financing methods. Project finance continues to be the primary mechanism for procuring and developing assets in industries like mining, power generation, power transmission, telecommunications, pipelines, transport and other infrastructure. Often bandied about in trade journals and industry conferences as a new financing technique, project finance is actually a. Each phase of mining is associated with different sets of environmental impacts. The availability of finance for mining projects is generally dependent on the economic robustness of a project, the requirements of the sponsor and the overall risk profile of the individual project or corporate entity.

The wharton school project finance teaching note 2 i. You are currently viewing dentons global capabilities in project finance. Have your badge scanned at the door attend 90% of this presentation. In finance, bankruptcy prediction has the vast majority among datamining implementations, but to the best of the authors knowledge such an implementation does. Dcf present value of estimated future earnings from the project 2. Public finance for years, many governments, including the south african government, funded projects by. Pwc to assist project financing for gold mining at buckreef. Financial modelling of stockpiles in a mining project. Learn about ore, grade, recovery, tonnage, unit costs, metal prices, payability, production, cash costs, cash flow, npv, nav, pnav.

A case study of a real asset feasibility study, assumptions, forecast, and dcf model. Project finance structuring nam theun 2 1 the views expressed here are those of the presenter and do not necessarily reflect the views or policies of the asian development bank adb, or its board of directors, or the governments they represent. Npv analysis is sensitive to the one of the most common methods to evaluate a mining project is the dcf method. Mining project finance is used to develop the exploitation of natural resources such as copper, iron ore, or gold mining operations in countries as diverse as chile, ghana and australia.

Project finance documents critical project documents. Modelling and project evaluation participants will build up a full financial model for a mining project. Mining projects require a unique type of financial modelingwhat is financial modelingfinancial modeling is performed in excel to forecast a companys financial performance. Because of this, the current high levels of interest from the global mining community in sources of alternative funding is no surprise, but what are.

Project financing is always tied to the economic outcome of a project and often is not guaranteed to any appreciable extent by the developers. Project finance documents created early in the deal lifecycle are part of the pitch to arrange project financing and must support our efforts to place project finance loans. It is a debt that can be exchanged for a specified number of common shares at a predetermined price, at the option of the holder. The keys to project financial management michael mclin maxim consulting group this session is eligible for 2 continuing education and 2 contact hours. Comprehensive coverage of project finance news and analysis mining journal an insight into the funding and investment initiatives occurring across the. Whether your project is exploring an emerging market or investing in an established one, were built to deliver the solutions you needanywhere in the world. The government of png has a legal right to acquire up to 30% equity in the project. Security agreements project finance is premised on the basis that the lenders will be able to take control of and transfer all material project assets in the event of a problem with the project financing. Financial modelling of stockpiles is a common challenge in any mining project, and this tutorial is inspired by the contents of our training course in financial modelling for mining projects. Security agreements project finance is premised on the basis that the lenders will be able to take control of and transfer all material project assets in the event of a. The finance will be classified either as a corporate loan, project finance or venture capital.

Global mining leader projects kpmg in australia few mining companies possess either the engineering strength or the will to build a mine completely independently. Usually, a project financing structure involves a number of equity investors, known as sponsors, and a syndicate of banks or other lending institutions that provide loans to the operation. Financial modelling for mining projects training course will assist you to progress your skills to efficiently develop, modify and analyse financial models for mining projects. Globix through its resources structures unique credit facilities for refineries that produce nonferrous metals. As undeveloped mineral resources are mostly located in the jurisdictions with high levels of risk, project finance is often the preferred financing strategy in the mining investments. Any mining project asset with a study is a perfect dcf candidate early stage is much harder to value mining assets are essentially one big npv analysis provide a very detailed plan last years are negative cash flow mining valuation npv. Worldwide, extractive industries account for 36% of the total project finance market, almost half the share of africa. Project finance is the financing of longterm infrastructure, industrial projects and public services based upon a nonrecourse or limited recourse financial structure, in which project debt and. Ive actually been through a few of these and agree with the majority of the answers listed here but for one fact. The wharton school project finance teaching note 3 there is no singular definition of project finance.