ABSTRACT
The level of uncertainty in a mining project is generally associated with the type and nature of the resource and the more the uncertainty surrounding this higher the project risk. The Net Present Value (NPV) of a project is a measure of the amount by which the project will increase the value of the business to its owners after taking into account that owner’s required investment return on capital invested. In discussing cash flows and NPVs of mining projects, the importance of the discount rate used in the financial evaluation cannot be over-emphasised. The chapter highlights activities that should be implemented to minimise risk. Financing later projects at an operating mine may attract non-recourse project finance, whereby the banks rely solely on the mine’s cash flow to service the loan capital and interest with security confined to a mortgage and charge over all unencumbered project assets.
