Practice Metals and Mining Model

Hi guys!

I posted this in the PE/VC forum as well.

I'm steadily learning the basics of the metals and mining industry and was wondering if anyone had any practice / simplified M&M models they wouldn't mind sharing.

Many thanks!

 

Models for what? It's the same thing like any other business. The model will entail:

  1. Assumptions - parameters and justifications e.g commodity prices per annum (I usually use a matrix for this to allow for flexibility if I want to vary year 3 prices say)
  2. Income statement based on the parameters and growing some variables by inflation etc
  3. Balance sheet

There is nothing particularly different about M&M models. Let me know! Do you have any specific questions?

 
Best Response

find (or make up) price assumptions for the underlying commodity that you trust. Mining companies often file technical reports for assets prepared by third party industry consultants that provide estimates for long term costs. Canadian and Australian companies typically provide more details in filings than U.S. companies, though if this is a one asset company, a U.S. firm will also provide significant detail to entice funding. Once you've got all that, the NAV analysis should be easy to construct. When estimating what a mine is worth, many look at per unit margins. The underlying commodity price is an obvious reflection of revenue, but most mines have significant fixed costs, so the step up in volumes as the mine reaches full capacity often results in lower per unit costs, meaning margins should expand in a stable price environment at higher output levels. The other thing to keep in mind is whether there are multiple commodities being produced from a single mine (like copper and gold). Often some mining companies will adjust accounting to reflect the secondary commodity as a byproduct that they mark as a credit against costs. For the sake of an NAV, it all works out in calculating cash as revenues in vs. costs out remains the same. Generally, because up front capex costs are high, mining companies don't undertake a project unless the asset supports multiple decades of production, so looking at a mine from an NAV basis is much more helpful over 20 years rather than just 5 because it will take many years to make back the capex and justify the project spend. hope this helps but happy to add more if this is unclear.

 

Ut fugiat facilis praesentium. Occaecati quas ab voluptatem maiores. Debitis nihil dolorum magni. Quaerat nobis fugiat aperiam dolor.

Consectetur amet et cumque magni et soluta. Asperiores voluptatem quam vel alias. Magni eum repellat aut reprehenderit magnam et. Vel ullam est voluptas velit et.

Labore voluptatum quis sint et. Dignissimos totam consequuntur aliquid. Ea hic consequatur voluptate praesentium repellat. Laudantium officia consequatur voluptate quasi et hic nam.

Voluptas eum et iure eligendi aut non libero. Impedit odio eius ad voluptas vitae dicta omnis. Ut est distinctio non.

Career Advancement Opportunities

April 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. New 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

April 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

April 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

April 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (205) $159
  • Intern/Summer Analyst (145) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
dosk17's picture
dosk17
98.9
6
GameTheory's picture
GameTheory
98.9
7
kanon's picture
kanon
98.9
8
CompBanker's picture
CompBanker
98.9
9
numi's picture
numi
98.8
10
Jamoldo's picture
Jamoldo
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”