The Application Of Financial Models In Project Evaluation ? Introduction

Computerized financial models can be used in all phases of the mineral industry from setting exploration targets to projecting profit plans for producing mines. In this presentation, I will use the example of an exploration company entering a new district to trace the application of financial models through the following intermediate phases. 1. Hypothetical analysis and strategy 2. First encounter of mineralization 3. Preliminary drill results - decision process 4. Feasibility studies 5. Post-feasibility negotiations 6. Producing mine 7. Acquisition of producing mines or mineral properties. I will conclude with a brief discussion of the mechanics of the financial models that we use at Wright Engineers Limited. As we progress through the seven phases, the availability and accuracy of the data will parallel the complexity and application of the financial models. However, the same basic financial models are utilized throughout the seven phases. I will begin by suggesting that the exploration group is somewhat autonomous and has the mandate to explore in Western Canada.