Source : AUSIMM MONOGRAPH23

CORPORATE CONSIDERATIONS
Development philosophy
Impact on company
The first consideration of a potential new project will be its
potential impact on the company. Will the project be well
received by the market in general and by the shareholders in
particular? How will the project impact the future of the
company, its market multiples, its reputation, its size and its
ability to capture other opportunities? To what extent should
joint venture arrangements or dilution of shareholders’ equity
be considered?
Financing
These impacts will also extend to the balance sheet, the availability
of debt financing, the need to raise more equity and the
ability of the company to manage an initial extended period of
negative cash flows.
Risk
Many of these considerations relate to the company’s exposure
to technical, financial and country risk and the ability to lay off
that risk. The greater the exposure to external risk, the greater
the need for care in addressing the critical components of the
project.
Development team
Internal Team
Few mining companies have the qualified staff available to
perform the complete evaluation, design and construction of a
new project. Early decisions must therefore be made regarding
the degree of control to be exercised by the company, whether
management will be provided by existing employees, whether
new professionals must be hired, or whether the entire project
will be managed by external contractors.
External team
There are many consulting companies providing a full range of
project management services. They vary from small, innovative
domestic companies, often with focussed excellence in a
narrow technical field, to large multi-disciplined,
multi-national companies with massive experience and
resources to draw upon. Decisions will be required regarding
the scope of the contract, qualifications of the consultant,
reporting relationships, contract administration and ultimate
management responsibility.