Slides of power point presentations by Mr. Henry Antwi on the Strategies of Attracting Funding for Mining Projects to the Accra Mining Network on September 25, 2015 at the Barclays Club House in Accra Ghana.
This presentation has been prepared for purposes of discussion. It contains opinions and comments that are intended to assist in the understanding of technical, commercial and legal issues that arise in valuation and project funding. It is aimed solely at educational issues in relation to those objectives and should not be used or relied upon for any other purpose. The opinions expressed herein are those of the presenter and do not necessarily reflect those of any organisation or company that may be involved in mineral industry valuation, appraisal activities or project funding.
2. Funding Strategies
DISCLAIMER
• This presentation has been prepared for purposes of discussion. It
contains opinions and comments that are intended to assist in the
understanding of technical, commercial and legal issues that arise in
valuation and project funding. It is aimed solely at educational
issues in relation to those objectives and should not be used or
relied upon for any other purpose. The opinions expressed herein
are those of the presenter and do not necessarily reflect those of
any organisation or company that may be involved in mineral
industry valuation, appraisal activities or project funding.
11. Market Capitalization
• The market capitalization for the Top 40 was
$791 billion at the end of 2014, which is
where it sat 10 years ago.
• Drop of 16% from $947 billion at the end of
2013.
• Second consecutive year of declines
• The market capitalization of the Top 40 is only
about half of its value four years ago.
13. Resource Nationalism
• Governments looking to maximize returns from their natural
resources and impose windfall taxes
• Increasing environmental obligations across the world
• Legislative lags in introducing new laws means that
nationalism is coming at a time when the industry is
struggling.
• Governments should therefore consult the industry and
consider a broader view of the returns from natural resource
development
14. Social License to Operate
• “You make noise, you get in the way, you cause a problem, we give
you money; we get what we want, you’ve got what you want, and
then once that money runs out, it starts all over again.”
• Some mining companies go through extensive consultation during
construction but do not engage the community during the
production cycle
• Community investments are disconnected from human resources
capacity so some projects are not successfully executed
• Social license to operate expected to remain or increase. Mining
Companies should find ways to address community concerns
16. Return on Capital Employed – Top 40
• Return on capital employed (ROCE) fell to its lowest level to 9% in 2014,
down from 9.5% in 2013.
17. Industry Response
• In 2014, the Top 40 miners delivered on their commitment to reduce capital
expenditures, which led to a slowdown in capital velocity.
18. Industry Response
• Short term quick-fixes such as idling equipment, retrenching workforce, revisiting
supply agreements, deferring capital expenditure, shedding non-core assets,
sharing mine infrastructure, pulling out of some geographies and commodities etc.
• Mine Automation Examples
– Rio Tinto - Mine of the Future program
– BHP Iron Ore - Integrated Remote Operations Centre
– Underground automation (LKAB etc)
• Advances in Surveying technology – GPS used to control movement of dozers, drill
positioning etc. Laser scanning used in underground to measure stopes and voids,
inaccessible to personnel
19. Funding Strategies
• Valuing your assets
• Main Valuation Drivers – Discount Rate,
Commodity Price and Capex
• Development Risks
• Value Creation
• Sources of Financing
• Funding Attraction Triggers
• Preparing your project for funding
• Due Diligence Process