Toronto: Understanding the Capital Efficiency and Risk Effects of a Streaming Deal

When:
October 26, 2016 all-day
2016-10-26T00:00:00-07:00
2016-10-27T00:00:00-07:00
Where:
Borden Ladner Gervais LLP ("BLG")
Bay Adelaide Centre
East Tower, 22 Adelaide St. W.
34th Floor
Contact:

You are invited to the Wednesday, October 26th meeting (at 4:15pm) of the Discussion Group of CIM’s Management and Economics Society, for a presentation by:

Michael Samis, Ph.D., P. Eng.

Associate Partner, Transaction Advisory Services, Ernst & Young LLP

who will deliver a presentation on:

Understanding the Capital Efficiency and Risk Effects of a Streaming Deal

Abstract: Stream finance has gained in popularity in recent years as traditional sources of debt and equity financing have become more expensive for mining companies. Industry is still arguing over the merits of stream finance even though investors have shown a willingness to provide mining projects with capital through streaming. Moreover, throughout the continued debate about the value of streaming, there has been little discussion about how streaming affects capital efficiency and alters risk exposures of both mine owner and streaming company. Understanding these considerations may provide mine owners with a betterappreciation of the trade-offs associated with streaming.

In this Discussion Group Session, Mike Samis explores through a case study the capital efficiency effects and risk exposures created by a streaming deal. The presentation looks at the following issues:

  1. Streaming within an Integrated Valuation and Risk Modelling framework.
  2. Effect of streaming on mine operating decisions.
  3. Changing project capital efficiency with streaming.
  4. Risk transfer effects between mine owner and streamer.

 

BIO: Michael Samis is a mining engineer with more than 25 years of natural resource industry experience involving operations, commodity price modelling, project valuation, finance, and corporate portfolios. He focuses on the following Strategic Capital Management (SCM) decisions and opportunities:

  1. Investing capital and making strategic investment design choices such as explaining the value and risk trade-offs between upfront and staged investment project designs;
  2. Analyzing project and corporate financing alternatives such as measuring the risk impact of streaming and sliding scale royalty finance;
  3. Protecting and building a company’s balance sheet such as assessing the possibility of covenant breaches and credit downgrades when financing an acquisition; and
  4. Reviewing corporate portfolio alternatives such as assessing the impact of country risk on a global portfolio of mining investments.

His SCM work uses an Integrated Valuation and Risk Modelling (IVRM) framework which is a combination of finance theory, decision analytics, risk management concepts, and numerical methods. IVRM expands the description of a SCM decision by recognizing forecast uncertainty and the ability to manage it through investment/operational flexibility and the contingent structuring of finance and taxation. As a result, IVRM has an enhanced ability to evaluate and communicate the risk exposure of competing SCM choices.

Mike’s mining and petroleum assignments involve complex forms of flexibility, financing, and risk exposure and range from the exploration stage through to late-stage capital investments. He has presented more than 30 IVRM courses world-wide to universities, public companies, and government. Mike is a registered Professional Engineer, a qualified person for valuation under NI 43-101 guidelines, and the recipient of the 2013 Robert Elver Mineral Economics Award from CIM for contributions to the Canadian mining industry in the field of mineral economics.

 

Wednesday, 26 October 2016

Refreshments at 4:15pm – Presentation at 4:35 pm

at

Borden Ladner Gervais LLP
Bay Adelaide Centre, East Tower, 22 Adelaide St. W., 34th Floor, Toronto

 

All are welcome to this excellent networking and learning opportunity. Please RSVP by email to secretary@cimmes.org if you are interested in attending.

 

Thank you to our sponsor, Borden Ladner Gervais LLP for again providing the space.

 

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