This course will give you tools to improve your operational cash flow models and budgeting tools. The effects of market and project uncertainties are discussed and methods to include their effects into feasibility analysis / budgeting are provided. Also methods to deal with uncertainty realizations are discussed and modeled.
Metal mining investments are practically irreversible, hundreds of million dollar investments with limited lifetimes. The importance of economic analysis of metal mining investments has become widely acknowledged as the decreasing profitability of new projects and unpredictable metal markets pose a challenge to the currently applied models of profitability analysis.
The first purpose of this course is to introduce participants to simulation and system dynamic (SD) models. Second, we will deal with the concept of Real Options (ROs). In general, RO's refer to flexibility of projects and they can be used to both decrease the negative effects of uncertainty and, on the other hand, enhance the positive future realizations of the projects. In this course, we will practice the hands-on building and applying techno-economic profitability models with embedded real optionality.
After this course, participants will be able to:
This two-days intensive course covers the following topics:
i. Introductionii. Basics of real option analysis in the industrial context a. Real option theory for metals miningiii. Specific issues of modeling a. Uncertainty representations b. Modeling of metal prices c. Importance of financing in the profitability of mining investmentsiv. Real Option valuation methods for metals mining a. Pay-off method b. System dynamic models and Monte Carlo simulationv. Practice valuing real options with a. Pay-off method (Excel) b. System dynamics (XCos or equivalent)vi. Summary and wrap-up
BEFORE the intensive course:- Participants write down key issues he/she is facing with the current cash flow models used in his current work OR thinks of a case example of an investment analysis problem he/she has encountered with- Participants will return material to the lecturer 2 weeks before the course and parts of the material will be used as a material to formulate practical exercises for the course
AFTER the intensive course:- Participants will continue solving their provided case examples using the methods learnt in the course- A Skype-consulting (min. ~1h) will be offered individually for each participant for a case example follow-/wrap-up
Type of training
The course combines classroom lectures and self-study.
Executives / leading / senior experts of metal mining companies interested in improving economic profitability of operations; parties investing or interested in investing in mining operations, e.g. Operational CEOs / CFOs; Business Controllers; Business Analysts; Industry / Banking / Investment Industry Consultants
20 years of experience in profitability analysis and real option valuation. Mikael serves as the director of two master´s programmes LUT School of Business. Before his academic career. Years of consulting experience in the industry. Past-president of the Finnish Operations Research Society.
Current & previous work
Working as a full tenured professor of strategic finance at LUT-University, Finland since 2013. Experience as department head, team lead, and running three master´s programmes (Finance, Analytics).
Serving as a MOB in a number of SME´s in Finland that operate in the fields of Finance and IT/ Analytics.
Previous working experience from other three universities in FIN and from Italy, and some years of experience from a business consulting company. Many previous research projects with the industry and grants from various research financing bodies.
Ordinary member of the Finnish Society for Sciences and Letters (oldest of the four science academies in Finland).
Selected teacher of the year at Abo Akademi U. and at U. of Turku, Pori Unit.
President of the Finnish Real Option Society
Past President of the Finnish Operations Research Society.
MOB of the Northern-European Society for Adaptive and Intelligent Systems
50+ journal articles, ~20 book chapters, 10+ monographs, 70+ peer-reviewed conference articles = ~200 publications in total
10 years experience in the hydrometallurgical industry in various expert roles. Several publications on cash flow modeling of metal mining industry under uncertainty.
10+ peer-reviewed publications related to techno-economic modeling and simulation of metal mining investments
For a detailed list see: https://www.researchgate.net/profile/Jyrki_Savolainen