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UBC Theses and Dissertations

A computerized valuation model for minig companies Wright, James Kirkland

Abstract

The most meaningful way to estimate the current value and the future value of a mining company is to consider the cash flow of the company through time. This is the case since the reported earnings of a mining company are highly sensitive to the accounting practices followed and to changes in metal prices. The valuation of a mining company is strongly dependent on the forecasting of the expected net cash flows of the company. The computer model presented herein has been designed to assemble all of the pertinent variables relating to a mining operation and to calculate the net cash flow for a mining company. The diversity of the operations in the mining industry has necessitated the development of a general model which can be applied to a number of different situations. The model has been developed for base metal mining operations which, produce any combination of the following seven metals: copper, lead, zinc, gold, silver, cadmium and molybdenum. The model has been divided into thirteen subroutines and a main programme. Each of the subroutines corresponds to a particular phase of the mining operation. In this way, the critical variables in the operation can be isolated and examined in detail. Although the model is complex and requires a large amount of data, it is hoped that its use will be straightforward and that it will be of assistance to those persons interested in the valuation of a mining company.

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