An Integrated Valuation and Risk Modelling approach to Dynamic DCF and Real Options

October 22 – 24, 2025

Golden, CO

2025 Course Outline

Day 1 – Morning.       

Introductory comments. A project valuation framework.  Valuation fundamentals.

• Creating value in the natural resource industries
• Three elements of a valuation model
• Project structure – cash flow, design flexibility, stakeholders
• Project uncertainty – financial, technical, execution
• Measuring investment quality – NPV (DCF and real options), IRR, PI
• Measuring investment risk – cash flow CoV, event probabilities, expected / conditional losses
• A technical / financial risk investment framework

Example: Copper World Project – a static investment analysis of the Copper World project
Example: Blackwater Gold Project – a static investment analysis of the New Gold and Artemis design proposals                                                                    Example: Skouries Copper-Gold Project – a static investment analysis of the Skouries Copper-Gold Project

Day 1 – Afternoon.   

Metal price models.  Simulating metal prices.

• Characterizing commodity price uncertainty
• Financial market information vs metal price forecasts
• Stochastic price models for precious metals and base metals
• Rebuilding a corporate forecast as a stochastic price model
  Example:  Building a stochastic price model in Excel
• Converting a stochastic price model into Monte Carlo simulation
• Simulating metal prices with @Risk
  Example: Building correlated gold and copper simulation models in Excel with @Risk

Day 2 – Morning.      

Analyzing projects with no flexibility. Non-linear cash flows.

• Modelling cash flows when there is no flexibility
• Corporate income taxes and financing default risk as non-linear cash flows
• Example: “Faux” financing of the Duparquet Project – introducing default risk non-linearities.
• Summarizing project production and cash flow information – cash low profiles, LOM cash flow amounts, unit costs and metal equivalents
• Example: Copper World Project– dynamic investment analysis of a long-life copper project
  Example: Blackwater Gold Project – dynamic investment analysis of the New Gold and Artemis design proposals                                                            Example: Skouries Copper-Gold Project – dynamic investment analysis of the Skouries Copper-Gold Project

Day 2 – Afternoon.   

Introduction to flexibility. Binomial techniques. Least squares analysis of flexible cash flows

• Different approaches to measuring risk – graphical, cash flow at risk, conditional tails analysis
• Converting a simulation into a binomial tree
• Approximating a price process with a binomial tree
• Developing true and risk-adjusted probability price trees
  Example: Building a binomial price tree in Excel
• Modelling flexible projects and types of flexibility
• Decision trees
• Using the Excel Binomial Real Options / DCF Valuation Add-in
  Example: A simple binomial model valuing satellite resources and a pushback at a mature mine.

Day 3 – Morning.       

Valuing flexible projects and assessing their risk.

• A flexible binomial tree analysis of the Copper World, Blackwater, and Skouries Projects
• Least squares / polynomial regression approach to simulating flexible projects
• Flexibility maps
• Least squares / polynomial regression analysis of the Satellite Resource, Copper World, Blackwater, and Skouries Projects
  

Day 3 – Afternoon.   

Valuing natural resource projects with flexibility.

Example: Skouries Copper-Gold Project – the value and risk impact of staged development across a range of copper/gold variations and project margins

• Dynamic cash flow modelling frontiers – technical risk and exploration
• Dynamic cash flow modelling frontiers – project finance
• Dynamic cash flow modelling frontiers – corporate portfolios
• Course wrap-up