Workshop Financing of Mining Projects. SRK Consulting (UK) Ltd All rights reserved.

Transcription

1 1 Workshop Financing of Mining Projects

2 Moderators 2 Carl-Wilhelm Levert Director PwC Energy, Utilities & Mining Johan Bradley Managing Director SRK Consulting Principal Geologist

3 Workshop Structure 3 1. Company Overview (PwC & SRK) and financing trends 2. Workshop Introduction 3. Discussion topic 1 4. Discussion topic 2 5. Discussion topic 3 6. Summary

4 PwC Global mining network 4 PwC has an extensive network of professionals focused on Mining PwC Corporate Finance M&A Valuations (enterprise) Financial Due Diligence Business Recovery Services Debt & Capital advisory PricewaterhouseCoopers in Sweden ( PwC ) is a member of a truly global network of firms which provides industry-focused assurance, tax and advisory services to build public trust and enhance value for our clients and their stakeholders. Stockholm More than 180,000 highly skilled, professional people in 154 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice. PwC s Corporate Finance and Mining network consists of over 1,700 and 1,500 professionals respectively covering all regions of the globe. The shear breadth of our network uniquely allows us to smoothly execute international assignments while managing cultural differences amongst various stakeholders.

5 PwC: Mining Finance 5 Globally mining companies are increasing their debt funding Equity increased a modest 4% to $682 billion. This was the lowest percentage of financing from equity in the past decade Gearing increased from 13% in 2011 to 24% in 2012 Year on year debt to equity issuance % 20% 40% 60% 80% 100% Debt Equity

6 Yield % PwC: Mining Finance 6 Trend Large cap increase bond issuance while junior miners find it difficult to attract financing Average yield for bond issue from 2009 to Top 40 Non Top 40

7 PwC: Mining Finance 7 Bonds is an alternative form of financing and we also see growth in use of royalty and streaming agreements Royalty agreements In a royalty agreement the lender (a royalty company or financial institution) provides the borrower capital upfront in exchange for a share in the project s future revenue. Streaming agreements Up-front payment in exchange for a certain percentage of ore from production (percentages vary by project) over the life of the mine Bonds & US PP Bond financing possible in Nordic mining sector increasing use of US Private Placement

8 8 Financing of Mining Projects Presenter: Johan Bradley Location: Stockholm, Sweden

9 SRK Offices 9 >1500 professionals 51 Offices 24 Countries 6 Continents

10 Global Mining Finance Guide 10

11 SRK: The Current Market 11 The Ingredients The super-cycle and high commodity prices Capital intensive marginal mineral assets Growth focused strategy The Approach Pressure to rush through due-diligence & technical studies In many cases over optimism The Results Huge write-downs High profile bankruptcies Risk averse financial community

12 Workshop Structure Company Overview (PwC & SRK) 2. Workshop Introduction 3. Discussion topic 1 4. Discussion topic 2 5. Discussion topic 3 6. Summary

13 Workshop Structure 13 Three discussion topics Discussion at table Presentation of one key point from each table 5 minutes discussion per topic Today s session is interactive and requires active participation!

14 Questions 14 Discussion topic (3 in total) Discussion at table Presentation of one key point from each table 5 minutes discussion per topic Question 1: What are the key components required to attract finance to your exploration / mining project?

15 Questions 15 Discussion topic (3 in total) Discussion at table Presentation of one key point from each table 5 minutes discussion per topic Question 2: Do we see any upside to the current financial situation?

16 Questions 16 Discussion topic (3 in total) Discussion at table Presentation of one key point from each table 5 minutes discussion per topic Question 3: What will the short and long-term impacts of recent Nordic bankruptcy cases mean for mining in the region?

17 Summary Company Overview (PwC & SRK) 2. Workshop Introduction 3. Discussion topic 1 4. Discussion topic 2 5. Discussion topic 3 6. Summary