3. Electronic Theses and Dissertations (ETDs) - All submissions
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Item Analyses of South African mining projects: technical variances and impact of these on project success(2018) Gasela, IpeloMining projects are known for having a poor success rate. The purpose of this study is to assess the impact of technical shortcomings on the value of mining projects and define success in mining projects, using an empirical equation. This study was focused on South African mining projects, due to the uncertainty of how successful South African mining projects are. A total of 11 projects were reviewed. Six from the platinum, three from the gold and two projects from the coal industry were selected due to the importance of these commodities in the South African economy. Actual technical and cost parameters were analysed and compared against the initially planned values. Financial comparisons were carried out in similar money terms. An impact of the planned NPV by actual performance was also analysed. This was only undertaken for projects whose DCF was published in the public domain. Most of the projects reviewed in this study did not reach the planned production, exceeded operating costs and/or capital expenditure. Technical factors contributing to this, included change in design during development, additional water handling, ageing infrastructure, lack of mining flexibility, and geological difficulties being the most common factor. The most common non-technical factors included community and labour unrest. Following the approach developed by Khosravi and Afshari (2011) in the construction industry, an empirical equation was formulated based on success criteria identified by McCarthy (2014), which were rated by mining professionals, in a survey, according to their sensitivity to the success or failure of mining projects. Capital cost overrun was rated the most sensitive criterion to project failure, while schedule overrun was deemed to be the least sensitive to project success by mining professionals. Only five projects, out of the 11 selected for this study, were assessed using this equation, due to insufficient data on other projects in the public domain. The results of this assessment enabled the projects to be ranked according to their relative success. The results of this assessment demonstrated that a project can still be in operation although it is performing far below its original design criteria.Item A framework to harmonise mineral asset valuation methodologies with existing and emerging financial reporting requirements(2017) Njowa, GodknowsOne of the consequences of globalisation in the extractive industries is the necessity to apply uniform accounting and valuation standards that are clearly understood and consistently applied by the global stakeholder community. At the beginning of the 20th century it was realised, mainly by the major mining countries that the extractive industries is one of the biggest sectors globally. In the extractive industries the single most important asset is the Mineral Resources and Mineral Reserves, yet this is not reflected anywhere in the financial statements. The major mining countries, through their mining institutes, realised that there was a need to develop standards and guidelines to align and standardise the definitions of Exploration Results, Mineral Resources and Mineral Reserves, which was achieved through the CRIRSCO template. From the accounting fraternity, several organisations also realised the need for an accounting standard specific to the extractive industries, specifically for financial reporting. Attempts by the IVSC and IASB to develop a global accounting standard for the extractive industry attests to the global requirement to develop internationally recognised valuation guidelines or a global framework for the valuation of mineral assets. Both the mining institutions and accounting standards setting boards have been working in isolation to develop a globally acceptable standard or guideline for the extractive industries, and neither has been successful due to the inherent complexities. The harmonisation of the national codes for reporting of Mineral Resources and Mineral Reserves through the CRIRSCO template, provides global common understanding. However, the national mineral asset valuation (MAV) codes, are needed to develop a similar international template. The CRIRSCO template provided a strong foundation on which the IMVAL template was developed. As part of this research a framework was developed to harmonise the national MAV Codes. Various authors have argued that there is no globally accepted standard or guideline for the valuation of extractive industries assets, nor is there a specific accounting standard for extractive industries. MAV is still an emerging discipline, coupled with the fact that financial reporting in the mineral industry is not yet fully developed, as IFRS 6 appears to be the only mineral specific financial reporting standard. This is supported by the fact that currently there is a lack of a comprehensive accounting standard for the extractive industries to guide the accounting, recognising and presenting these assets in the primary financial statements. This thesis argues that there is a gap between reflecting and accounting for Mineral Resources and Mineral Reserves in the financial reporting systems, and how these mineral assets are valued and reported. These identified gaps between MAV methodologies and financial reporting requirements formed the basis of this work. Hence this thesis develops a framework to harmonise the existing and emerging financial reporting requirements and MAV methodologies. This framework is applicable to developmental projects and operating mines, and was validated by applying the framework to a real life case study. Turquoise Hill Resources (Turquoise), which owns Oyu Tolgoi copper-gold mine in Mongolia, was selected as a good case study, due to the fact that Turquoise owns and operates this single multicommodity mineral asset, with information available in the public domain. Hence the value of Turquoise on the stock exchange is driven by the fundamental value of the mineral asset only. The results of the proposed framework showed the highest correlation coefficient of 0.77, meaning that there is a strong correlation between proposed framework and the proxy company value selected. It is concluded that the proposed framework to harmonise MAV methodologies and the emerging financial reporting requirements can be applied to estimate values for companies in the mineral industries.