While the new Minister of Economic Development sends his apologies at being unable to speak at this Conference, I am delighted to present on his behalf. The Ministry of Economic Development is not only responsible for managing the Crown mineral estate, but also for developing initiatives and policies to promote regional economic development and for managing the GovernmentÆs broader economic development strategy. IÆd like to talk to you today about the critical links that need to exist between these three areas. I am going to start with a question for all of you. What do these towns have in common? + Waiuku, + Thames, + New Plymouth, + Nelson, + Greymouth, + Arrowtown, + Reefton, + Palmerston, and + Dunedin. The answer is minerals. These towns were nearly all founded on the back of minerals and mining. In the case of Greymouth it was gold that brought the people to the mouth of the Grey River and it is coal that sustains the town. In 1870 the town of Shortland had 20 000 people, 90 hotels and was twice the size of Auckland. We now know Shortland as Thames, and of course Auckland is considerably larger. One wonders whether the good folk of Shortland suffered from ætraffic jamsÆ with 90 pubs to navigate between. Gold mining in the Aorere River near Collingwood led early entrepreneurs to develop the land surrounding Nelson as a food basket to sustain the mining population. Nelson is still thriving on this legacy today. The town of Palmerston was founded in 1862 as a stopping point for gold miners heading into central Otago. The gold rush made Dunedin New ZealandÆs first highly industrialised city. Reefton on the West Coast was the first town in New Zealand to have electric lights and in the recent past we were wondering whoÆd be left to turn them off. New Plymouth, and Waiuku are still known as energy and mining centres. By contrast once thriving towns like Capleston, Canvastown and Blackball are just names on a map now, and at the extreme you have places like Waiuta which has been reclaimed by the West Coast forest. Queenstown was built off the back of the gold rush, but by 1900 with the gold gone, only 190 people lived there yet Queenstown has managed to rebuild itself thanks to some other stunning natural assets. These examples help illustrate three key points that I am sure will each be extensively linked with our minerals and mining industries. First, NZÆs development and that of its regions has been, and continues to be, inextricably linked with our minerals and mining industries. Second, things change. Sectors, regions and countries must continually adapt and improve if the are to avoid the fate of the Waiutas of this world. And third, the development challenges faced by NZ and its mining industry in the 21st century are vastly more complex than in the past. Governments and industry alike must balance and respond to a range of domestic and international environmental, cultural, economic and other interests and considerations. If you thought of your industry as æjust digging holes in the groundÆ then you may as well simply stick your head in one!
This paper outlines the authors' views of the methodologies which can be employed to value mineral properties at different stages of development for the purposes of project financing, mergers and public floats. This paper discusses the key issues in Discounted Cash Flow (DCF) analysis including the importance of data verification and the shortcomings in DCF analysis. Stockmarket valuation measures and valuation methodology for exploration and pre development projects are examined through examples and pitfalls are identified. The use of valuations in corporate transactions and their strategic value is also discussed.
The approach to valuations at the Normandy Poseidon Group is a measured and methodical process that utilises skills sourced from a number of different disciplines. Whilst being subject to a strict set of guidelines, it is also sufficiently flexible to be able to cope with the considerable variety across the resources industry. The group uses Discounted Cash-Flow (DCF) techniques extensively in order to develop a base valuation. Other external factors (eg the market) are, however, also taken into account when forming a view on value. Other methods of valuation are used in tandem or as alternatives depending on the task. DCF techniques are an important tool but would never be used in isolation. Considerable care must be given to developing the DCF analysis as its components (eg discount rate) are prone to misuse. Whilst the valuation process is quite detailed and scientific, it is really only as good as the inputs or assumptions (technical, financial, etc) that are used. The methodology used remains consistent whether the group is undertaking the corporate planning process or making an acquisition.
Planning of modern mines entails considerable challenges in the areas of ground control, materials handling, safety, environment, equipment and personnel. Many orebodies are not economical unless efficient mining systems are used to win the ore. Relentless pressures are placed on mine operators to force them to become more productive and to make mines more competitive in modern economies. This has generated an intense drive to adopt technologies that rely on a greater degree of mechanisation, automation and computerisation. There is no turning back; high technology in mines is here to stay: computer controls and monitoring, computer aided mine design, information management systems, etc. During the past 20 years significant advances have been made in the areas of mine design, mine equipment and geomechanics. One could rhetorically ask if the advances in mine backfill technologies have kept pace with developments in other sectors of the mining industry. This paper will look at a few key mining technology sectors and will compare the relative progress of backfill technology to these sectors.
The Minerals Industry and its Contribution to New Zealand's Economic Development