Information - Extension Requests / Penalties

Assignment (20%) and Case Study (25%)

No extensions will be granted. There will be a deduction of 10% of the total available marks made from the total awarded mark for each 24 hour period or part thereof that the submission is late (for example, 25 hours late in submission incurs a 20% penalty). This penalty does not apply for cases in which an application for Special Consideration is made and approved.

Late submissions will be accepted up to 96 hours after the due date and time.

Further information on submitting an Application for Special Consideration can be found at https://students.mq.edu.au/study/my-study-program/special-consideration.

 

Quiz (5%)

You are expected to make yourself available for assessment during the relevant quiz window.

Students who do not submit this task by the due date and time receive a result of zero. This penalty does not apply when an application for Special Consideration has been made and approved. 

Students who do not attempt the quiz receive a mark of zero. This penalty does not apply in cases where an application for Special Consideration has been made and approved.

Further information on submitting an Application for Special Consideration can be found at https://students.mq.edu.au/study/my-study-program/special-consideration.

 

Final Exam (50%)

You are expected to present yourself for examination at the time and place designated in the relevant MAFC Timetable at https://www.mq.edu.au/about/about-the-university/faculties-and-departments/business/study-with-us/macquarie-applied-finance-centre/timetables.

Deferral of an examination is not permitted unless an application for Special Consideration is made and approved.

Students who do not attend receive a mark of zero. This penalty does not apply in cases where an application for Special Consideration has been made and approved.

Further information on submitting an Application for Special Consideration can be found at https://students.mq.edu.au/study/my-study-program/special-consideration.

CLASSES

Timetable: Detailed timetable for classes are on the Centre’s web site www.mafc.mq.edu.au

Consultation Times:

Students who wish to contact any of the teaching staff may do so through:

•             The Unit’s iLearn site, in relation to general queries (so that all students may benefit); or

•             Individual consultation with the lecturer by email in the first instance, if necessary.

 

REQUIRED AND RECOMMENDED TEXTS AND/OR MATERIALS

Text: Nil

Additional Readings:

•             A reading pack will be made available online prior to commencement of the unit.

•             In addition to selected readings, the pack will contain case study materials and questions for discussion related to each case study.

•             These readings and lecture materials are examinable.

Lecture Notes: Available electronically via iLearn.

Calculators: In examinations, hand held calculators are permitted. Mobile phones and computers are not permitted.

Assumed Access: Access to a computer with word processing and spreadsheet capability is assumed, as is general student computer literacy.

TECHNOLOGY USED AND REQUIRED

Unit iLearn Site:

•             Found by logging on to iLearn ilearn.mq.edu.au, then clicking on Resource Industry Investment Analysis.

•             This is where you will find forums, downloadable resources and links to important pages.

•             The forum allows you to communicate with other students and lecturer(s) and may provide supplementary material.

Important Notice:

•             It is important that you familiarize yourself with the Unit’s iLearn site.

•             Students should check the Unit’s iLearn site regularly (minimum twice a week and prior  to all lectures) and look for updates and distribution of materials (including case studies) related to the unit or assessments and, if relevant, participate in forum discussions.

TOPIC 1: THE RESOURCES INDUSTRY IN AN ‘ESG WORLD’

Topics:

•             Unit introduction, objectives and requirements

•             What is the resources industry?

•             Base metals, precious metals, industrial minerals and energy

•             How and where is value created in the resources industry?

•             Environmental and social mandates: constraints and opportunities

 

TOPIC 2: EXPLORATION, RESERVES AND RESOURCES

Topics:

•             Mineral licensing – rights and obligations

•             The mineral license versus the ‘social license’ to operate

•             How are exploration decisions made? Where do we drill next?

◦              Decision Trees

◦              Expected Monetary Values

◦              Farm in/Farm out agreements

•             What are Reserves and Resources? What level of knowledge and confidence is required so that reserves can be “booked”? What judgment should we make about field life if we want to value a resource?       

TOPIC 3: VALUATION APPROACHES

Topics:

• How do we value un(der)explored but prospective acreage? How do we value properties with known but uneconomic reserves? Issues in resource project valuation.

◦              Valuing development properties

◦              Valuation assumptions – discount rates, terminal values

◦              Real option applications

◦              ‘Stranded’ resources

◦              Framing project expenditure decisions

◦              Acceleration economics

◦              Unit technical costs

 

TOPIC 4: COMMODITY MARKETS

Topics:

• How are commodities marketed and sold? What is the purpose of price hedging? Why have hedging issues been at the centre of several corporate collapses?

◦              Exchange traded commodities

◦              Long term supply contracts

◦              Hedging: objectives, instruments and strategies

◦              Hedging: managing risk or creating risk?

◦              Making price forecasts

•             Case Study: Sons of Gwalia, Pasminco

 

TOPIC 5: FISCAL REGIMES AND COUNTRY INVESTMENT RISK

Topics:

• The natural resources of a country are the property of the state or crown. Resource companies therefore face two levels of taxation: a “rent” tax, to compensate the state/ crown for the development of a finite resource, and general corporate taxation. How are these “rent” taxes levied? What impact will they have on our investment decisions?

◦              Government take versus exploration prospectivity

◦              Royalties and rent taxes

◦              Production sharing contracts

◦              What is ‘sovereign risk’? How might ESG issues impact perceptions of sovereign risk?

 

TOPIC 6: ESG INVESTING AND THE RESOURCES INDUSTRY

Topics:

•             Value versus ‘values’ investing

•             How has the investment landscape changed over the past decade for the resources sector? What are the impacts on the availability of capital?

◦              Shareholder activism

◦              Lending restrictions

•             Green Indexes

•             Funds Management – ESG reporting

 

TOPIC 7: INTERPRETING RESOURCE STOCK FINANCIAL STATEMENTS

Topics:

• Investors external to a resource company must make judgments about future profitability on the basis of published accounting reports.   What are the critical accounting issues that relate to resource companies?

◦              Resource company accounting conventions

◦              How is the value of in-ground reserves presented?

◦              Accounting for exploration success/failure

◦              Depletion of mine development

◦              What is “impairment”? When is a property “impaired”?

◦              Provisions for rehabilitation

◦              Unit costs: full costs and cash costs

•             Case Study: Western Area NL

 

SESSION 8: RESOURCE STOCK VALUATION

Topics:

• How can we combine reserves reports, accounting statements, fiscal regimes and commodity prices to create an earnings and free cash flow forecast for a resource stock? What stock valuation approaches are most applicable to resource stocks?

◦              Forecasting sustainable earnings

◦              Forecasting financial statements