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Valuing mining companies: A guide to the assessment and evaluation of assets, performance and prospects

Charles Kernot, Mining Analyst, Banque Paribas

The author is well qualified to have written what is claimed with some justification to be the mining investors’ first vade-mecum.
Engineering and Mining Journal, USA

…many useful tips for both the novice and the experienced mining professional.
Mining Magazine

 - a one stop shop to mining analysis
 - up-to-date information on companies and their markets
 - a historical section puts the industry in perspective
 - an easy to understand reference without technical jargon

In order to value a company it is necessary to evaluate its prospects from all points of view. Valuing mining companies takes the reader through geology, mining, mineral processing and the final marketing and pricing of a mineral commodity. 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. Throughout there is also an increasing emphasis on the environment and the additional costs mining companies have to bear.

ISBN 1 85573 435 4
ISBN-13: 978 1 85573 435 7
June 1999
256 pages  234 x 156mm  hardback  
£155.00 / US$265.00 / €195.00

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About the author

Charles Kernot was educated at Winchester College and The Royal School of Mines in London where he obtained his honours degree in mining geology. He is also a member of the Institution of Mining and Metallurgy. He has worked in the City since 1985 and has researched all areas of the metals and mining industry over the course of his career prior to joining Paribas in 1995. He was previously head of International Mining Research at Credit Lyonnais Laing.

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Contents

Part 1 The development of the mining company
Part 2 Evaluation requirements
Part 3 Evaluation techniques and trading

Part 1 The development of the mining company

The history of mining
 - The beginning of mining
 - Discovery and interest in metals
 - Coinage
 - The first mines

The development of mining companies - the early years
 - Cornish mines
 - The South African mines and finance houses
 - The Australian scene
 - North American adventures
 - Rest of the world

The development of mining companies - the past 20 years
 - Diversification
 - Structural change
 - Emerging markets
 - The benefits of success

A guide to the current range of mining companies

Part 2 Evaluation requirements

Exploration
 - Where to look
 - Metal deposits
 - Geological associations
 - Geological structure and formation
 - Industrial mineral deposits
 - 6 Discovery and definition
 - Drilling and sampling
 - Reserve calculation
 - Feasibility studies

Discovery and definition
 - Drilling and sampling
 - reserve calculation
 - Feasibility studies

Mining techniques
 - Dredging
 - Open pit mining
 - Underground mining

Processing routes
 - Process routes
 - The first stage
 - The second stage
 - The third stage
 - Losing metal all the way

Mining company taxation and allowances
 - Australian grants and taxation
 - Canadian grants and taxation
 - South African grants and taxation
 - United States grants and taxation
 - Other countries grants and taxation

Mining company accounting practices
 - Accountancy practices: past and present
 - Accountancy practices within the mining industry
 - Enhancing revenues
 - Net profits interests and net smelter returns

Mine financing
 - Mine financing

Part 3 Evaluation techniques and trading

Metal price forecasting
 - Precious metals price forecasting
 - Base metal price forecasting
 - Bulk commodities
 - Minor metals and other commodities

Cash flow and earnings analysis
 - Cash flow statements
 - Discounted cash flows and net present values
 - Investor’s use of net present values
 - Single mine companies
 - Single product companies
 - Multi-product companies

Management evaluation and other techniques
 - Management experience
 - Valuing management
 - Other valuation techniques

Trading in mining shares
 - Types of investor
 - Constructing a portfolio
 - Local stock markets
 - Stock market trading
 - When to buy