Mining Project Finance Model (Debt and DCF Valuation)
Originally published: 07/08/2020 08:55
Last version published: 07/07/2022 13:09
Publication number: ELQ-14183-7
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Mining Project Finance Model (Debt and DCF Valuation)

Mining Project finance model based on tried and tested investment banking methodologies.

This is a project finance model based on a copper mining business. It is best suited for analyzing debt capacity, and performing a discounted cash flow valuation. The mine is open cast, and has a plant with a refinery and smelter to produce LME standard copper for export. This can be expanded and customized to one's individual mining business very easily. The capital expenditure profile and resultant mining plans can easily be modified, as well as the production plant's productivity rate per hour. The model also includes basic stress-testing functionality on grades, operating costs and commodity prices.The model includes a capital expenditure input to model any expansion plans in future.Senior debt and mezzanine facilities have been modeled, where the mezzanine facility has a built-in cash sweep mechanism.CAPM and WACC calculations are included, as well as a valuation sheet to determine the enterprise and equity value of the business for various growth-rate assumptions.Accounting statements (income statement and balance sheet) are also included, as well as a tax and working capital sheet which can be adjusted for country-specific tax rates, and business-specific creditors/debtors days.The model also includes standard project finance debt covenant ratios such as loan-life cover ratios and debt-service cover ratios.

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Further information

A customizable financial model useful for valuing a mining business,
Useful for calculating debt capacity and structuring mezzanine and senior debt,
Useful for business strength and weakness deep-dives and credit analysis, cost breakdowns and year-on-year financial comparisons

Mining businesses, particularly involving metal exports and beneficiation
Debt funding via investment banks and private equity
Company valuation

Non-mining or non-manufacturing businesses (e.g. service industries, fast-moving consumer goods, property etc.)

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