“In recognition of his seminal work in developing the Geoscience Factor Method for valuation of mineral properties and his long-term involvement in the practice of mineral property valuation in Canada.”
Lionel C. Kilburn received a BSc (Honours), an MSc, and a PhD from the University of Manitoba. He is the author of several scientific papers, received a Gold Medal for outstanding research in geology in 1953, and was the recipient of an Inco Fellowship from 1954 to 1956. Kilburn began his career at the Falconbridge Mine in 1956 as an underground geologist, became chief geologist in 1968, Assistant Vice-president in 1969, President & CEO of Falconbridge Copper Ltd. in 1976, and Vice-president of Falconbridge Limited in 1982. After retirement in 1986, he acted as geological consultant to the Ontario Securities Commission and the Toronto Stock Exchange. He is a Life Member of CIM and GAC, and was a Registered Engineer in Ontario and Manitoba. He was president of the PDAC from 1985 to 1987, and the Engineers Club of Ontario from 1987 to 1988. Currently, he is a prospector active in Ontario.
“In recognition of his tireless, tenacious and influential work on gold economics and its relationship to fiat currency.”
John R. Ing has 45 years of experience as a portfolio manager, mining analyst and investment banker starting with Jones Heward, then Mead, Pitfield Mackay Ross, and Dominion Securities. In 1986, Ing together with two partners bought Maison Placements Canada Inc., one of Canada’s oldest investment dealers whose focus is to help small and mid-sized companies in the resource sector. Ing is a leading advocate for gold investment, authoring numerous articles, giving speeches around the world in support of his golden views. He publishes a regular institutional publication on the gold industry that is circulated globally. He has served on numerous industry committees including Chairman of the Toronto Stock Exchange Stock List Committee from 1993 to 2007, and is a member of the Canadian Institute of Mining, Metallurgy of Ontario, CFA Society, Mining Research Analyst Group (MRAG), Phi Kappa Pi (McGill) and the Cambridge Club.
“In recognition of his crucial role in championing new techniques for Valuation of Mineral Properties in Canada.”
By Dinah Zeldin
Michael Samis first became interested in how advanced finance theory could be applied in mining during the early 90s, when he was a junior engineer with Gold Fields and with Anglo American in South Africa. “I was doing economic analysis and it struck me that the engineering approach to investment decision-making was very rigid,” he reminisces. “You focus on a particular design by expending much effort to estimate cost and production rates, forecasting metal prices to come up with a cash flow for your design. However, very little thought is given to how fluctuations in metal prices and other market and project factors may cause you to change your design, investment plans, or mine operations.”
According to Samis, conventional discounted cash flow (DCF) analysis of mining investments can be an adequate tool for a range of investment situations, but in others may be insufficient. “Potential influences on the value of a mining project, like opportunities to change operating policy, the impact of metal price reversion on future mine cash flows, or commodity-linked financing such as streaming were not fully factored in,” he explains. “The value and risk effects of such considerations can be recognized with numerical methods such as simulation and derivative valuation methods from the finance industry. When I asked mining professionals whether these techniques were useful during the 90s, the response was often that current economic analysis methods were more than sufficient for assessing industry investment problems.”
Determined to explore these ideas in-depth, Samis returned to academia in 1995, to pursue a PhD at the University of British Columbia. He spent five years exploring the effects of metal price uncertainty on mine design and on operations through the use of derivative valuation methods. “One of the responses to the rise in metal prices over the last 10 years has been operating mines expanding their resource base and developing areas that were previously uneconomic,” he points out. “One way of altering a conventional DCF model is to combine a decision tree with a lattice model of metal price uncertainty to investigate the possibility of mining a sequence of progressively lower-grade deposit areas.”
After leaving graduate school, Samis collaborated with Graham Davis, a professor at the Colorado School of Mines to create a three-day professional development course, “Using Dynamic DCF and Real Option methods to value, manage and finance mining projects,” which Samis and Davis still offer to the industry at least once per year. “It explains how people can adapt a conventional DCF model to include newer ideas like stochastic simulation, and how to alter cash flow risk adjustments to better reflect project risk characteristics,” he says.
In 2000, Samis re-entered the corporate world, first taking on freelance consulting projects and then occupying the post of director of financial services, at the natural resources division of AMEC Americas Limited from 2004 to 2007. “Then I had the chance to take a job at Ernst & Young, which appealed to me because it offered a much wider range of valuation and economic problems that included financing, derivative valuation, and tax analysis,” he recounts.
Now an associate partner, valuation and business modelling at Ernst & Young, Samis enjoys his work and seeing the beginning of greater acceptance of alternative valuation methods in the industry. “Initial acceptance seemed to start with a reference ten years ago by CIMVal [CIM’s Special Committee on Valuation of Mineral Properties] that the Real Option method is an acceptable valuation technique. In the last few years, we are seeing more companies begin to use Real Options or Dynamic DCF methods or variations on these techniques to provide supplemental economic analysis in their NI 43-101 reports and for internal investment decision-making.” he says.
And although Samis has his hands full at his day job, tackling projects like “helping a South American mining operation introduce advanced financing techniques into their long-range mining process and working with another company to examine various strategic development alternatives for a very large-scale copper-gold project,” he makes time to publish papers, attend Mineral Economics Society of CIM events, sit on CIMVal and participate in discussion groups. All that interaction is very beneficial, he says, “because it helps you better understand your industry’s needs and concerns.”
This year, Samis received the Robert Elver Mineral Economics Award in recognition of his significant contributions to the field of mineral economics.
Michael Samis is a professional engineer and an associate partner with Ernst & Young LLP, with more than 22 years of experience in the industry. His academic, research and professional careers have focused on the practical adaptation of advanced finance theory and derivative methods for valuing mining investments with complex cash flow structures, flexibility, and risk exposure. His work ranges from the exploration stage through to late-stage capital investments and includes analyzing the economic and risk impact of project financing, commodity-linked financing, and changes to tax and royalty regimes. Samis is among the first mining professionals to use these methods in NI43-101 reports and for impairment testing purposes in financial reporting. To increase industry awareness, he has taught the effective use of these valuation methods through professional development courses at universities, natural resource companies, and professional organizations throughout the world for more than 10 years. Samis has also presented or published numerous papers on valuation topics such as flexible pushback development, copper-gold projects, long-life assets, multi-stage exploration programs, windfall taxes, and the combined economic impact of project finance and hedging. He holds a PhD from the University of British Columbia that combines research in the fields of mining engineering and finance.
Deborah McCombe is a Professional Geoscientist with 30 years of domestic and international mineral exploration and mine development project experience. Deborah has focused on due diligence reviews, exploration projects, reserve estimates, feasibility studies and valuations in connection with mergers and acquisitions. Prior to joining Roscoe Postle Associates, Deborah was Chief Mining Consultant for the Ontario Securities Commission. She was involved in the development and implementation of NI43-101 Canadian Disclosure Standards for Mineral Projects. Most recently, she was the recipient of the PDAC 2012 Distinguished Service Award for her many contributions and distinguished service to the mineral industry and its supporting organizations.
Deborah is actively involved in industry associations as Chair of Committee for Mineral Reserves International Reporting Standards (CRIRSCO) – (CIM Canada); President of the Association of Professional Geoscientists of Ontario (2010-2011); a Director of PDAC (1999-2011) and Chair of the PDAC International Affairs Committee; past Chair of the CIM Toronto Branch, a CIM Distinguished Lecturer on National Instrument 43-101 and a member of the CIM Standing Committee on Reserve Definitions.
"For his landmark contributions, visionary efforts and entrepreneurial-driven spirit in transforming the Canadian mineral economics field.”
Pierre Lassonde has an MBA from the University of Utah and a B.Sc. in electrical engineering from École Polytechnique in Montreal. He holds honorary PhDs from the University of Utah and the University of Toronto.
In 1980, he became president of the gold division of Beutel, Goodman & Company, a position he held for 10 years, during which time he directed its highly successful gold investment fund. Pierre co-founded Franco-Nevada Mining Corporation in 1982, and over a 20-year period provided shareholders with a 36 per cent annualized rate of return. He became post-merger president of Newmont Mining Corporation in 2002 – the world’s largest gold producer.
From January to November 2007, Pierre was vice-chairman of Newmont Mining Corporation. He served as chairman of the World Gold Council from 2005-2009. In 2007, as chairman of Franco-Nevada, Pierre led a group of investors in bringing the company back to the public market. Franco-Nevada is a gold-focused royalty company with a market capitalization of over $3.3B. Pierre Lassonde is the author of The Gold Book, The Complete Investment Guide to Precious Metals.
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