The capital numbers in mining are in often mind bogging and it can be intimidating working to present recommendations for major expenditure . Here are a few approaches we have used to help make sure that what we are presenting makes sense , and will not show up major flaws when examined by third party review
Number 1 , 2 and 3 . Have the financial model audited by somebody with the expertise to check that the technical and commercial assumptions make sense and are accurately reflected in the model . In Teviot’s experience we have never come across a model that did not have a significant flaw , in fact, usually several . There are enough risks in mining without investors having to deal with plain errors or mistakes in data input or formulaic errors that could be avoided. Its simply a matter of good practice to get things checked out.
The value of the project is the difference between what happens if you don’t make the investment ( the Base Case ) money versus what happens if you do. It is often the case that too little attention is given to logically thinking through the Base case and what will really happen in such a scenario.
ABC analysis is good way of representing any project , big or small. It sets out the rationale and approach for the project – often an improvement idea , on a single piece of paper, and is helpful in communicating what the project is all about to a and ensuring all project stakeholders are on the same page. It asks the simple and powerful questions, Where are we now? Where do we want to be? How are we going to get there? and ‘ What resources do I need? . For further illustration a simple example ABC analysis is provided here
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