Developing a Mining Business Case for Investment: Methods

Abstract

In the current business environment only a strong mining business case will be able to access raised capital. The mining business case, from orebody to market, is fundamental to the success of raising capital for mining project and operations. When the mining business case is strong, large returns can be made for investors, and when it is flawed, large sums of money are lost.

This chapter covers the process of developing a mine, from exploration, feasibility to production and closure, the structure of the business case which is driven by the market and the orebody, the team as an integral part of the success of the business case, legal structuring of the mining business, the financial analysis of the mining business case, valuation methods to enable successful negotiation between the mine developer and the investor, the identification and management of risks in mining, the importance of environmental and social sustainability to attract mining capital against the poor track record of many mining project of the past, the plan and realty of implementing mining projects and importance of questioning and defending the business case to investors.

The business case is summarised in a mining project matrix, which will highlight the strengths to focus on and weaknesses to be addressed, enabling the mine developer to approach the market for capital with confidence.