Financial Model for Open-Pit Mining Operation

I wanted to get a bit more specific in the financial models that I have been producing in excel. So, one of the most applicable fields I could find that truly makes good use of the things you can setup in a model is trying to project out the finances of an open-pit mining operation. There are many assumptions that can be given dynamic uses in order to better allow the user to to sensitivity analysis.




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Updated for improved calculation on IRR and ROI basis, added a DCF (discounted cash flow) analysis, and more dynamic cost references plus better instructions for the value per tonne of ore.

The bulk of this work was about figuring out all the related capital startup costs, employee types needed, and general supplies used on an annual basis. After that part was solved, it simply became a matter of figuring out how to project revenue. For that part I took a unique approach and assigned a % to each ore type and gave that ore type a value per tonne. Then, you can simply enter the amount of ore you plan to produce on a daily basis. Based on that and the % of each ore type you expect to be in each tonne, it tells you the projected revenue per year.

Some quick features include the ability to project out 50 years, see a break even value in summary, see total and net pre-tax cash flow based on a given terminal year, and visual charts that show costs/cash flow.

Any financial model will work great as long as you can somehow give potential revenues, initial investment, and operational costs. That is what this financial model has done.

I tried to make these costs as closely related to what is actually needed if you were to have your own mining setup. The user has flexibility to change any of the cost assumptions to whatever they may actually see when doing their due diligence.

Financing assumptions have been added to this model. This allows the user to pick how much they wanted to put up in cash/equity compared to the amount financed with a loan. The corresponding debt service would then populate in the pro-forma accordingly. You will be able to set all the loan parameters also.

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