11743 (v.3) WASM Advanced Mine Finance 332

Area:

WASM Mineral Economics Teaching Area

Credits:

25.0

Contact Hours:

3.0

Lecture:

1 x 2 Hours Weekly

Tutorial:

1 x 1 Hours Weekly

Prerequisite(s):

2806 (v.3) Finance (Introductory) 201

Syllabus:

Basic valuation concepts. The ore reserve problem. Estimating revenues. Capital and operating cost estimation. Mine taxation. Project evaluation criteria. Accounting for risk in mining investment.

Unit Outcomes:

On successful completion of this unit, students will: Have become familiar with recent developments in risk analysis and project evaluation, including the application of option valuation methodologies to project and investment opportunities decisions in the mineral and petroleum sector. Be in a position to communicate with specialists in these fields and to fully understand and therefore become capable of interpreting and explaining the results of sophisticated analyses and evaluations carried out by 'experts'. Be provided with an ideal 'spingboard' to pursue the subject of real option valuations as applied to the resources sector in further depth professionally.

Texts and references listed below are for your information only and current as of September 30, 2003. Some units taught offshore are modified at selected locations. Please check with the unit coordinator for up-to-date information and approved offshore variations to unit information before finalising study and textbook purchases.

Unit References:

Baker, M.P., Mayfield, E.S. and Parson, J.E. (1998), Alternative models of uncertain commodity prices for use with modern asset pricing methods. The Energy Journal V.19 (1) pp. 115-148. Bradley, P. (1998), On the use of MAP for comparing alternative royalty systems for petroleum development projects. The Energy Journal v. 19 (1) pp. 47-82. Claeya, J. and Walkup, G. (1999), Discovering real options in oilfields exploration and development. SPE Hydrocarbon Economics and Evaluation Symposium, Dallas, Society of Petroleum Engineers. Torries, T.F.-(1998) Evaluating Mineral Projects: Applications used Misconceptions, Society for Mining, Metallurgy and Exploration Inc. Faiz, S. (2001), Real option applications: from success in asset valuation to challengesfor an enterprise approach. Dallas, Society of Petroleum Engineers. Jacoby, H. and Laughton, D. (1992), Project evaluation: a practical asset pricing method. The Energy Journal v.13, pp.19-47. Kirkwood, C.W. (2002), Decision tree primer. Temple, Arizona State University. Copeland, T.E. and Keenan, P.T. How much is flexibility worth? The McKlinsey Quarterly, 1998. N.Z.

Unit Texts:

Benninga, S. (2000), Financial modelling (second edition). Cambridge, MIT Press. Mun, J. (2002), Real Option Analysis. John Wiley and Sons, Hobaken, New Jersey.

Unit Assessment Breakdown:

Class and individual assignments 40%, Final exam 60%. This is by grade/mark assessment.

Field of Education:

80100 Accounting (Narrow Grouping)

HECS Band (if applicable):

Extent to which this unit or thesis utilises online information:

Not Online

Result Type:

Grade/Mark

Availability

Availability Information has not been provided by the respective School or Area. Prospective students should contact the School or Area listed above for further information.

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