Commodity metal prices are one of the most important sources of uncertainty in a mining venture, and are central to the mineral investment decision having a significant impact on the financial performance of companies in the mineral industry. Some of the main reasons for which mining companies and firms should, by some means, analyse and model future metal prices, to assist them in their forward planning, are:
Present and past price movements shape expectations about future prices and profits from exploration and mining.
Prices influence both mining revenues and the cost of capital for financing various operational strategies such as expansions, developments and exploration, among others.
At R&O ANALYTICS we analyse, model and assess the effect of future commodity price uncertainty in project economics providing both a specialised consulting service and the appropriated tools for metal price forecasting. The solution we provide are:
Chart historical and live market commodity (metals and non-metal) data.
Market information analysis for metal prices, i.e., historical, spot, future and forward prices, including:
Price trend analysis and estimation
Price Volatility analysis and estimation
Modelling and forecasting metal prices using both Monte Carlo simulation and Binomial lattices.
Cash Flow Analysis
A mine project evaluation is a techno-economic model simulating the financial performance of a mining project over its whole Life Of Mine (LOM). The prediction of the value of a mining project is a complex matter. The reason is the specific nature of mining projects. A cash flow statement/budget is one of the most important financial statements for a mining project/business. A cash flow statement is a listing of cash flows that occurred during the past accounting period. A projection of future flows of cash is called a cash flow budget. The cash flow statement/budget can be as simple as a one page analysis or may involve several schedules that feed information into a central statement. At R&O ANALYTICS we use various methods available to estimate the value of a mining project’ that depend upon the specific nature of the mine and the stage of the mining project. The solution we provide are:
Technical economic valuation of mine and exploration projects.
Cash flow modelling and building (Excel – spread sheet).
Discount rate analysis and estimation – WACC and CAPM.
Cost modelling and optimisation.
Key project indicators (KPIs) Sensitivity and Scenario analysis.
Financial modelling and Cost/Benefit analysis.
Due diligence and preliminary economic assessment.
Technical and compliance reporting (JORC Code, NI 43-101).
