Valuation of metals and mining companies wall street oasis. Other information pertaining to or affecting valuation is included. Valuing a mining company using net present value avoid. Art pincomb, asa, cpg mineral commodities are classified as highvalue, lowvolume or lowvalue, highvolume. For companies with a string of losses, book value can be negative and, hence, meaningless. A single that can contain the gist of the book is that the valuation model is chosen on the basis of available data and the quality of data and not on the basis of the theoretical validity of the model. Fantastic entry book to understand the insandouts to aid investing in mining. I was under the impression that the dcf was solely based on the cashflows for a particular year and was independent of the stage the company was in. Mining and metals continue to be among the best performing global equity sectors, but conflicting issues from pricing bubbles, imminent recessions, demand destruction to resource scarcity are confusing investors. Fuer homepage valuation of metals and mining companies. The paper is based on my experience as a mining engineer participating in and later directing valuation work performed by. A comprehensive guide to mining investment analysis designed for use by financial and mining analysts, executives, and investors, the mining valuation handbook.
These standards have also been incorporated into the mandatory technical reporting framework for mining companies listed on the toronto stock exchange tsx, a framework known as ni 43101 standards. Chapters are devoted to accounting practices and taxation, providing valuable information on the financial aspects of mining. A guide to the assessment and evaluation of assets, performance and prospects pdf, epub, docx and torrent then this site is not for you. Valuing mining companies by charles kernot overdrive.
Charles kernot is the author of valuing mining companies 4. The art of valuing a gold mining company like barrick gold. Ev to reserve is also used for valuing mining companies because its very difficult to assess the exact amount of deposit, so their valuations follow the market value of its reserves and. Valuing mining companies takes the reader through geology, mining, mineral processing and the final marketing and pricing of a mineral commodity. Valuation of metals and mining companies introduction. From a financial perspective the book covers the taxation and balance sheet structure of a company and describes how this can affect valuation, giving examples of different valuation techniques. It also has links to about 1015 other pdfs that cover. It is just as futile to compare mining stocks to each other based on these metrics because mining companies have different mine lives in their operations. This is an excellent book for those interested in precious metals investing, especially for mining stocks. Learn about ore, grade, recovery, tonnage, unit costs, metal prices, payability, production, cash. This book provides an international view of the mining and metals industry from a historical perspective of mines and mining to potential problems. If you could take a gold mining project, with all its gold, all its costs, and all its incomes, and process the entire thing in 30 seconds how much would you be left with.
For miners, apart from the daytoday operational risks, there are three main uncertainties that investors have to ponder. Almost all the early treatments, including recent texts by gentry and stermole,5,9 discussed the valuation of mines and mining projects. Coal mining industry valuation, price to earnings pe. The pdf doesnt cover everything by all means but it is a quick beginning step for one to build out their model. A guide to the assessment and evaluation of assets, performance, and prospects usually ships within 4 to 5 days.
How to value a mining stock when valuing mining stocks, theres a key point to remember you can only get so much ore out of a mine before it is depleted. The essential guide to investing in mining opportunities, now in its fourth edition. Charles kernot this book gives a perspective on the international mining and metals industry, from historical details of mines and mining to the potential problems encountered in attempting to value a mining. Mining valuations are sometimes required for ipos, fairness opinions, litigation, mergers and. Valuing mining companies covers all aspects of mining, mining company evaluation, and financial valuation. Only recently has the topic of valuing just the mineral interest, separate from an enterprise as a whole, been. Valuing a mining company using net present value here is a simple, down to earth way of describing net present value npv. This book gives a perspective on the international mining and metals industry, from historical details of mines and mining to the potential problems encountered in attempting to value a mining company. It starts with a guide to history, focusing on the more. It goes without saying that he prefers this approach. This book describes all the methods used to value companies.
Various valuation methods like priceearnings ratio, dividend yield and eva have been discussed in an elaborate manner. Fully revised and updated, this fourth edition of the classic text provides new and uptodate information to better explain the mysteries surrounding the resources industry. Price to earnings pe, price to earnings pe, price to book ratios of companies within coal mining industry csimarket. Written by victor rudenno, a leading global expert on mining investment analysis and consultant to mining companies, financial bodies, and governments, the mining valuation handbook. The other method of valuing a company is to work out a companies net present value. You have to take into account not just the cash flow that the mine s is generating, but also sustaining capital costs including future exploration and development costs associated with keeping the mine in production. What valuation metrics should mining companies use. If youre looking for a free download links of valuing mining companies. Chapter 5, 6 and 7 describes discounted cash flow, multiples and real options methods and discusses applications for metals and mining companies.
A different strategy is required to value a mining company as a mine is a finite resource. A guide to the assessment and evaluation of assets, performance, and prospects this book gives a perspective on the international mining and metals industry, from historical details of mines and mining to the potential problems encountered in attempting to value a mining company. Mining and energy valuation for investors and management has become an essential resource for assessing the value and investment potential of mining. Mining and energy valuation for investors and management has become an essential resource for assessing the value and investment potential of mining opportunities. A look at the risks and rewards of mining stocks and what the major and minor mining companies can bring to your portfolio. The paper takes the reader through different stages of metals and mining companies from mineral exploration to mine production and provides an overview of. Get dons guide to valuing mining stocks, which features as a chapter in his book. It also gives an idea how to avoid commonly made mistakes when valuing metals and mining companies. Join our mailing list dons thoughts try out searching, portfolios and other paid features. A guide to the assessment and evaluation of assets, performance, and prospects this book gives a perspective on the international mining and metals industry, from historical details of mines and mining to the potential problems encountered in attempting to. In mining, valuation is the process of determining the value or worth of a mining property i. A case study of a real asset feasibility study, assumptions, forecast, and dcf model.
It includes 350 companies in the stock lists although the stock lists are not included in the digital versions. Hey everyone, i just thought that id share a great resource for information on the basics of valuing metal and mining companies. The only reasonable way to evaluate a mining company is to look at the net present value of the potential future cash flow, discounted at an appropriate discount rate. It starts with a guide to history, focusing on the more recent aspects of the discovery of diamonds in canada to the brex fraud in indonesia. Mining and energy valuation for investors and management, fourth edition covers a wide range of essential topics, including.
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