Primer: Metals & Mining valuation approaches, 3rd edition

We explore different approaches to valuing Metals & Mining assets & equity. We discuss the strengths & weakness of various approaches and some useful cross checks, and we also explore potential pitfalls & limitations. This is our "3rd edition" and is meant as a "practitioners guide" rather than an academic paper. Key approaches covered include Price/NPV (Price/DCF), i.e. building a DCF ideally asset by asset, deducting debt and other adjustments to derive equity value - very fundamental but highly dependent on price inputs and may not capture exploration upside; earnings multiples (EV/EBITDA, PER), which rely on commodity price forecasts and fail to capture growth or asset life; cash flow metrics (FCFY, P/OpCF), which flatter companies that underinvest and penalize those investing for growth; EV/Sales, which is less volatile and useful for picking lows in a stock versus itself;