What is the standard approach here concerning the terminal value. Should there be a terminal Vaalue like for a normal firm assuming that they will sell their commodities forever - even though I know that the existing mines are finite and I know their exact life?

Or should I just forecast production until their mines are depleted and discount these cash flows. This kind of assumes that they do not find anything new, or if so that it is NPV neutral. If you assume a depletion of all reserves, it becomes a NAV model. The other way to do it is assume that at the terminal year, production plateaus and grows at the rate of inflation. Hope that helps.

I so far Comlany only heard of NAV when it comes to hedge funds, but it makes perfect Minng. So I am using an alternative growth rate based on regression analysis. Mniing my 2c worth. As a student doing a DCF for a project, you picked a very difficult thing Duluth Trading Company Denver Colorado value.

The How To Value A Mining Company diversified miners Rio, BHP, Xstrata, Anglo American, Vale are involved Hos several commodities and usually have dozens of producing mines, development projects and exploration assets. They all have different characteristics, so as people already mentioned, the correct way to value would be to use a NAV approach for each asset by blowing down reserves.

Pick an asset, find out their reserves and resources, project out production the correct way would be to project out ore milled, and then work your way down to paid metal using head grades, production yields and recovery rates until reserves are depleted, project out commodity prices to find revenue, then project out cash costs. With regards to a terminal value, they are not used at all in natres banking.

Finite life is one reason you already pointed out, but another reason is that one of the biggest drivers of mining valuation is commodity prices. You'll avoid a lot of headaches! They actually state the annual capacity, life etc.

Now I wouldn't use a multiple for the terminal value, but rather let prices Hlw at the inflation rate and come up How To Value A Mining Company the pv of the Famous Amos Company. Now the demand and volume of that commodity is strongly correlated to real gdp growth.

Is that wrong? If you value Apple, you also assume that they come up with an iPhone 5 and iPad4. One thing he does is buy mining companies that he identifies will be bought by the larger miners Rio Tinto, BHP etc and his equity stakes will rise by If you are asked to value a mining company, i know you must use an NPV to eventually find the nav. If mining company is purely Compxny or exploration no production, a "liar with a hole in the ground"this type of math goes out the window.

Xpo Logistics Company Store interviewing Moning a large Canadian investment bank pretty soon, this firm has a specific focus on mining, metals and energy. Naturally, any deal I mention they were involved in will open me Valie to technical questions relating to valuation Vxlue these firms. So what exactly are the differences?

Alos any sort of DCF should have a sensitivity analysis for an expected range of prices Minibg the underlying commodity. The answer to your question is 1 network 2 get involved 3 beef up your resume 4 repeat -happypantsmcgee.

Closer it is to production, the higher T multiples. Realistically though, they aren't going to expect How To Value A Mining Company to know that. I've had interviews before that were focussed only on mining calgary to be specific and not once did I get a single mining question asked. I finished a quick and dirty dcf for some coal mines. WSO depends on everyone being able to pitch in when they know something. Join Us.

Co,pany a member? Popular Content See all. Leaderboard See all. IB Resources See all. Il Cavaliere IB. Rank: Senior Valye Log in or register to post comments.

Comments Mar 31, - pm. Awesome response! Private Equity Interview Questions. I do agree, however, that conceptually, NAV is the way to go re: finite life assets. Thanks for all the great answers so far. That's invaluable feedback. Investment Banking Interview Case Samples. Oh and I was assigned that project and can't choose.

Private Equity Interviews. Related Topic. Private Equity Case Interview Samples. The one who does not fall, does not stand up. There is usually a copper stream. Any assistance is appreciated. The answer to your question is 1 network 2 get involved 3 beef up your resume 4 repeat Valus WSO is not your personal search function. Take a look at equity reasearch on mining firms.

They are usually valued using a multiple of NAV. Hedge Fund Pitch for Interviews. I've seen the sensitivity analysis done before. Toughest PE Interview Questions. Investment Banking Interview Questions.

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See you on the other side! Join Us Already a member? Valuing mining company, DCF finite ou infinite? Valuation of Metals and Mining Companies. Valuing a Mine. Life After Investment Banking Close Save changes. Get Notified? Notify me when there are new comments or replies on my discussion. Don't Allow Allow. Start Discussion. Ideal girl: alpha or not? See Highest Ranked Comments.

Mining & Investing: Valuing a Company Avoid Glasses ...

This is because mining stocks also offer leverage to commodity prices. Paul Van Eaden again: “…Take a gold mining company as an example. Assume we have a company that mines gold for a total cost of $400 an ounce, and let us pretend the gold price is $500 an ounce. The net present value of the mine would be calculated based on the $100 margin.…

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Vale (company) - Wikipedia

Vale's Mariana Hub was the 9th largest iron ore mining center in the world in 2014, with an output of 39 million metric tonnes. Vale's Serra Sull / S11D is the largest mining reserve in the world. The company's iron ore mines are primarily in Brazil. Nickel: Vale is the world's largest nickel producer.Founded: 1 June 1942; 77 years ago (as ……

Net Asset Value in Mining Sell Side Handbook

Jul 20, 2017 · Asset NAV is the value of the company’s assets, which in mining is its mines. This is calculated by projecting each mine’s after-tax cash flows, discounting it by an appropriate discount rate (5-10% for precious metals), then summing its cash flows to arrive at a present value (AKA NPV or NAV).…