Using Dynamic Cash Flow Modelling to Assess the Risk and Return of the Financing Package for the Tocantinzinho Gold Project

2023 SME Annual Conference

Denver, Colorado

February 28, 2023

Mining projects are financed by numerous methods ranging from traditional project debt to alternative financing arrangements tied to metal prices.  A project’s ability to fulfill its financing obligations are often assessed with aa static cash flow model that calculates internal rate of return and financing ratios.  However, this modelling approach has a weakness in that investment performance and risk are not adequately assessed across a range of future possibilities.

Dynamic cash flow modelling is a framework that uses simulation, finance theory, and risk management concepts to consider a project and its financing across a range of possibilities.   This presentation analyses the financing for G Mining Venture’s Tocantinzinho Gold Project to understand how risk and return is distributed between equity, debt, and a stream.  It highlights how financing impacts the possibility of early closure and that the risk of some financing arrangements may differ from common industry perceptions.  Dynamic cash flow modelling is a powerful tool for designing a financing package that shares economic potential between stakeholders while recognizing exposure to financial market risk.

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