I am building a valuation model for company that sells minerals. Which is the common/best practices to get the prices to insert in the revenue model? Please tell me is not Bloomberg.
I tried to value futures of the underlaying as a temporary measure.
| +81 | Q&A - Buyside Equity Research Analyst/PM | 29 | 2w | |
| +24 | Clues in Financial Reporting Analysis | 7 | 1w | |
| +19 | Is Equity Research a good pivot into finance? | 2 | 1d | |
| Equity Research at Bank vs IG, High Yield & Leveraged Loans Research at Asset Manager | 6 | 11h | ||
| +17 | Am i fairly compensated? | 9 | 1w | |
| +14 | Data Science to PM | 8 | 2w | |
| +14 | Heard they don’t model at Oppenheimer | 10 | 3w | |
| +12 | ER - Remote Jobs? | 8 | 2w | |
| +11 | Who uses sell-side Strategists? Are they valuable? | 4 | 2w | |
| +10 | What Is Everyone's Exams situations like? | 10 | 1w |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Can speak to metals/mining from a banking perspective. We usually have two price deck scenarios - (a) consensus from Bloomberg, FactSet, research reports (e.g., research on Barrick will typically have the covering firm's gold price assumptions) and (b) our commodity research guys have their own price deck.
We'll usually see a 2-3 year outlook and a "long term" price which is basically flat beyond the forecast horizon.
Hope this helps.
And in your experience, how many years do you forecast? 5 or 10?
I am currently doing 10, but given your POV, it looks that I am over forecasting.
(It’s for my Master Thesis, no experience with commodities companies)
Depends, is this a mine or something more downstream like a processor?
Lithium Compounds manufacture. They also have the mines and brine pools.
You would project till the mine is depleted. This could be 15 years, could be 30 years, but you do till depletion.
Probably makes the most sense to take a sell-side model and rejig some of the assumptions. You probably won't have a confident reason to change production numbers, but you can play around with costs (i.e. run up initial Capex by 20%), and playing around with the commodity price deck.
As Rabbit mentioned, you'll use consensus price deck (average out estimates from other ER guys). There will usually be specific estimates for 2-3 years, then flat run-rated LT price, which will usually be lower than spot rates. You always want to be super conservative in this as commodity rates are super volatile, so best to model out at rock bottom style pricing and see if you still make money at that price.
Which company?
Delectus eaque quam aspernatur et nostrum. Cum qui reiciendis doloribus. Qui consequatur necessitatibus tempora quia.
Quo veniam id dolor ex placeat non. Voluptatem ut eligendi et et odio. Vero dolor beatae temporibus neque laboriosam sunt voluptatem. Modi ab molestias possimus consequatur dolorum odit deserunt. Vel sed molestiae est quaerat consequatur excepturi sapiente. Exercitationem numquam dicta cupiditate voluptates voluptatem. Laborum officiis voluptas id consequatur.
Occaecati reprehenderit et et dolorum sed officiis at. Ut et eum molestiae culpa modi velit repellendus. Quod consectetur doloribus earum omnis voluptatum. Iure veritatis officiis quis voluptatem expedita magni. Voluptatem quia perspiciatis nesciunt in.
Nihil et exercitationem et sit consequatur ipsa adipisci corrupti. Expedita totam dolores vel. Est eius labore omnis magni error sunt.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...