Description
Assessment 1: Assignment (Individual) – Part B, Practical
Task overview
This individual assignment will require you to choose an Australian publicly listed mining development company from a provided list and then to undertake an analysis of the company’s flagship project valuation as well as making investment recommendations based on both information provided by the company as well as more broadly available in the market. This assessment is worth 30% of the marks of the subject, and is marked out of 100. It is important for students to understand that this assignment relates to valuation of the company’s flagship mineral development project, which is then related back to company-wide metrics such as issued capital etc. Students will be awarded best grades for insightful valuation observations and clear statement and justification of assumptions used in producing the project valuation metrics.
Company selection
You will be emailed a link to a Google Doc. There will be 25 companies to choose from. There will be a limit of 7 students per project/company. Once 7 students have chosen a particular project that company will no longer be offered. Please note that it will first in best dressed in terms of project selection.
Requirements
For your chosen mining development project, please complete the following tasks, summarized in an executive summary of no more than 10 pages (excluding appendices), plus an accompanying excel file. Unless stated otherwise, please use the most recent annual report available, feasibility studies, quarterly activities reports and other announcements identifiable on Morningstar DatanalysisPremium as a basis for your executive summary. Access and usage arrangements for Morningstar DatanalysisPremium was extensively demonstrated in Lecture 6.
Students are to assume that the project will be undertaken or commence now.
Project overview and ESG Discussion (20 marks)
- Provide a brief background of the company flagship project (i.e., location of the project and primary commodity to be produced and the future price outlook for that commodity(ies). What was the ownership of the CEO/MD and board of directors. Who were the largest two investors and what were there shareholdings? (10 marks)
- Discuss all relevant ESG costs and benefits associated with development of the project (note this can include discussion of any issues relevant to Indigenous Australians. (10 marks)
Project valuation analysis (50 marks)
- Provide a forecast of the cash flows for the flagship mining project. Take care in clearly laying out assumptions in terms of commodity prices, discount rate, forecast production rate, capex etc. (20 marks)
- Taking care to review the company’s most recent financial statements, feasibility study disclosures and quarterly activities reports compute the following project valuation metrics; (30 marks – breakdown below as follows)
- Compute a project NPV.
- Compute a project ARR.
- Compute a project IRR.
- Compute the project Payback Period.
- Compute the project profitability index.
- Compute the project Payback Period.
- Forecast the cash flow per share and the P/CFPS and or P/E ratio life of mine
Accounting, market and project valuation implications (30 marks)
- Given the above analysis, and the company’s current share price and market capitalisation, would this be a company worth investing in? Why or why not? Pay attention to providing a detailed justification for your underlying valuation assumptions and conclusions (30 marks)
Assignment format
Your project valuation analysis must be completed in Microsoft Excel. Your executive report must be typed using 12 point font, 1.5 line spacing and 2.5cm margins on all sides. The report must have a maximum length of 10 pages (excluding appendices, cover page and marking rubric). Refer to the UTS Business School Guide to Writing Assignments on recommendations and suggestions on how to structure and present your assignment. All material in excess of the page limit will be disregarded.
