BRIMM203: Real Options vs. NPV: Risk Management in Mining Decision-making

The goal of this course is to help participants decide whether they want to pursue the full Executive Microcertificate, while still teaching core concepts that will be useful for any career in the industry as a stand-alone course. This is the foundation course for the program. We are going to tie together our 4 core themes – sustainability, exploration, mineral processing, and finance, into a common economic thesis.

BRIMM102 is all about the variables that go into mining finance. We are going to talk about modeling; we are going to talk about commodity prices and risk. Cost of capital will get covered, and how we compete for money, lag time, cycle time, and the core issues with building a balance sheet. Finally, we are going to talk about the difference between accounting and actual profits.

The goal of BRIMM103 is to capture the gap between sustainability and financial decision making. Good decisions can be both sustainable and deliver to the economic bottom line, Excellent decision making delivers to all of the triple bottom lines. This course will leave you with the ability to write a sustainable business statement in the mining industry around any decision you make for your company.

This course will teach about commodity markets and how they impact mining, exploration, and corporate decisions. The goal is to deliver focused information that helps decide the value of a project independent of its short-term cash flows, stock price, or promotion. The two case studies will build on the first three classes, contrasting gold vs. base metal markets fundamentals.

The goal of BRIMM201 is to look at more depth into the economic benefit of conducting plant upgrades. By working through case studies around the main plant economic drivers the course aims to give the participant an appreciation of the main variables, their interaction and how potential changes can affect not only plant profitability but sustainability of the operation.

BRIMM206 builds off the sustainability economics foundations introduced in BRIMM103. It takes a close look at a number of topics relating to sustainability and the mining industry including ore bodies as a common, energy efficiency, carbon pricing, tailings dams and their impact. It is the capstone course in the sustainability specialization relating all of these issues to economics, stakeholders, the environment and our license to operate.

BRIMM207 will lay out the foundation for building a business case for exploration and the hurdles the industry faces. Topics will include dilution, overhead issues, economic noise vs. signal. We will also go over what an economic ore body looks like at every stage of exploration, what it takes to take another’s perspective on a deal. There is a range of exploration deals, and we will go over how they are different from each other. We will end by taking a brief look at exits options.

BRIMM208 will create an economic model for an exploration project’s fundamental business case. We will use the BRIMM goalpost model of risk management to deliver what is needed on an asset basis to have a viable exit and set up the risk-reward equation for each stage of exploration. Part of the course will focus on how to create presentations that deliver the economic case with limited data. Finally, we will talk about news flow, luck, and leaving real options open.

BRIMM209 will lay the foundation for financing and structuring an exploration project. Not all financing comes from the public markets, and we will talk about everything from going public, to how to structure JV’s, to how to look at dilutive and non-dilutive interests. Mapping a deal for its full life cycle from day one is very important. Finally, we are going to wrap the exploration sequence about the rational ratio of time spent structuring instead of focusing on quality projects.

BRIMM204 is focused on building a financial model for a mine. Data from a NI43-101 for a real project will be used to generate this model. Participants will learn how to read and harvest data from a NI43-101 as well as how to build this into a financial model that can be used to make decisions around the project.