Advanced Mining Economics

This course is currently not available as a general course – It is presented only for a single company or group of companies. 

The Advanced Mining Economics course is designed as a follow-on from the standard “Mining Economics” course and covers more complex economic-based assessment challenges occurring at mine sites, at the feasibility study stage of new mine assessment, mine expansions and re-capitalizations, or in the merging, or shut-down of mines and associated infrastructure.  The course also covers a number of areas where less- advanced economic ideas or ideas that are plain wrong, commonly applied, have limitations and where these limitations can result in incorrect or sub-optimal decisions in the management of mining enterprises.

Whilst the completion of the standard course is not a prerequisite, attendees at the advanced course must have a thorough understanding of frequently used economic and mining terminology, mine costing, discounted cash flow preparation and analysis, and fundamental economic concepts such as marginal costs and opportunity costs.

Who should attend?

  • Senior Decision-making Personnel/Managers (Mine Site and Corporate)

  • Business and Strategic Analysts / Financial Accountants

  • Corporate Finance, Marketing, and Change-Management Personnel

Course Outline

Prior to commencing the course individual issues will be reviewed with company personnel and a number of case studies will be prepared (or adapted from previous studies) to ensure relevancy to course attendees and company objectives.  Areas set out below are a sample of some of the advanced economic concepts that are covered as well as typical issues addressed via case study examples:

  • Economic Depreciation, including replacement of equipment that is not worn out and/or continuing to use equipment that is worn out in an environment of capital constraints; valuation of equipment mid-life, especially with availability of new technologies.

  • “Brownfields” developments and low marginal costs of production associated with mine expansions. Why “Brownfields: developments are supposedly more economic than “Greenfields” developments.

  • Real Options, and the economic value/cost of incorporating flexibility in choices for planned and operational mines. Examining real options to defer or bring-forward changes in the mine, to develop in phases, to change as markets change, and other options both operational and financial.

  • Comparing investment alternatives that have different risk/return characteristics.

  • Discount rates and the marginal cost of capital at different stages of mine development and at different production rates. How simplistic use of these tools can lead to incorrect choices on production rates, expansion strategies, and the treatment of and response to market down-turns.

  • Marginal Cost of Capital for Portfolios of Mines as a guide to decision-making.

  • Why "Pit Optimization" isn't. How the process of going about mine assessments leads to sub-optimal outcomes.

  • What is different about investments in mining and other capital intensive industry compared to other industries and compared to classical economic theory. What are the pitfalls in applying the tools of classical economics to investments in mining.