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Valuation of Metals and Mining Companies
 

TexasTim's picture
(Baboon, 101
 
Points)
 on 6/22/12 at 1:00am
Gold

Hey everyone,

I just thought that I'd share a great resource for information on the basics of valuing metal and mining companies. The pdf doesn't cover everything by all means but it is a quick beginning step for one to build out their model. It also has links to about 10-15 other PDFs that cover the topic. I wish the best to all of you!

Valuation of Metals and Mining Companies

Regards,

TexasTim

There is life and death. I'm going to bust my ass to make an impact 'til the latter comes.
Tags:
hoodinternet's picture

Fantastic, thanks a lot! SB

(Baboon, 123
 
Points)
 on 6/21/12 at 12:12pm

Fantastic, thanks a lot! SB for you

captainkoolaid's picture

god bless

HF
(Gorilla, 598
 
Points)
 on 6/21/12 at 12:27pm

god bless

SonnyZH's picture

This is sick, thanks for

HF
 
Points)
 on 6/21/12 at 2:38pm

This is sick, thanks for sharing.

The HBS guys have MAD SWAGGER. They frequently wear their class jackets to boston bars, strutting and acting like they own the joint. They just ooze success, confidence, swagger, basically attributes of alpha males.

Moneyball's picture

This is really great! Thanks!

ER
 
Points)
 on 6/21/12 at 9:53pm

This is really great! Thanks! Gonna read it all in one sitting.

Moneyball
See my other WSO blog posts

arsenalsg's picture

This is great,thanks a lot!

IB
(Chimp, 4
 
Points)
 on 6/22/12 at 4:45am

This is great,thanks a lot!

hartfordwhalers84's picture

Cool, thanks

CO
 
Points)
 on 6/22/12 at 10:11am

Cool, thanks

George87's picture

+1 SB for you sir, thank you

IB
 
Points)
 on 6/22/12 at 10:36am

+1 SB for you sir, thank you for sharing!

mhurricane's picture

That's cool. I have a

 
Points)
 on 6/22/12 at 10:43am

That's cool. I have a question, though. If someone wanted to g into Metals/Mining, or O&G for IB, would they have to have knowledge about commodities?

Backwardation/Contango for futures contracts, etc? Or, just understand the dirvers of the company and industry, etc?

Many thanks.

The difference between successful people and others is largely a habit - a controlled habit of doing every task better, faster and more efficiently.

RGE's picture

Dude this is old, I had this

IB
(Orangutan, 315
 
Points)
 on 6/22/12 at 3:54pm

Dude this is old, I had this on my industry primers list. It was #38 on the list, but nice try.

TexasTim's picture

RGE, you're right that it

(Baboon, 101
 
Points)
 on 6/22/12 at 9:02pm

RGE, you're right that it might be old. It is a shame that the primer list was taken down. Mhurricane, I'll put you in my perspective and that is to learn everything that you can that is applicable in an efficient manner. This whole guide is a concise source of information for you to learn quickly and use as a tool for whatever project comes your way.

I'm new to the game and probably not qualified to give you an answer, but I think it is essential for you to create a scenario analysis in your model for future prices. You can base the scenario off of current trends, historical data, and research reports. Globaldata and most other research reports will include different prices of the commodities into their projections.

There is life and death. I'm going to bust my ass to make an impact 'til the latter comes.

thewaterpiper's picture

Mhurricane, for Metals &

IB
(Monkey, 59
 
Points)
 on 6/22/12 at 9:57pm

Mhurricane, for Metals & Mining IB, it is very much about understanding industry drivers and project evaluation (i.e. how mines work).

It's useful to stay on top of the commodities market, but more important to know the trends at the corporate level in the industry (e.g. how are miners allocating capital, what commodities are they targeting and why, what geographies are they entering / exiting)

There is little need to know about things like futures contracts etc. Long term commodity prices form a fundamental part of mining companies' investment decision, and your clients will have their own, very strong views on how commodity prices are going to move.

mountainvalley's picture

Thanks a lot!

IB
 
Points)
 on 6/24/12 at 8:40pm

Thanks a lot!

juniormistmaker's picture

Interesting primer and it's

IB
(Baboon, 127
 
Points)
 on 6/25/12 at 10:03pm

Interesting primer and it's pretty valuable for someone trying to learn a little bit about the metals and mining space.

There are a couple of items however that aren't really done in practice. Real option value isn't something generally used, nor is WACC, at least in the precious metals space. P/E also isn't something that anyone really looks at either. The US banks like to use some of that stuff and most of the corporates just laugh at them for it. Generally for valuation you're going to use NAV, P/CF for the senior guys and TEV/EBITDA for some of the bulks. The rest of the stuff is fairly irrelevant in IB.

Souriyy's picture

Would anyone have a full

 
Points)
 on 6/30/12 at 1:47pm

Would anyone have a full production model that they would be willing to share?

Also, would anyone be willing to critique a production model that I've created?

Thanks!

thewaterpiper's picture

Yep, do not ever mention P/E,

IB
(Monkey, 59
 
Points)
 on 6/30/12 at 7:51pm

Yep, do not ever mention P/E, no one in the industry takes it seriously. P/NAV and EV/EBITDA are the key multiples. EV / Resources or EV / Reserves is used for developers, and also for valuing early-stage projects.

Souriyy, happy to have a look.

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