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Boom or Bust in Mining – Are Your Cash Flow Models Reflective of Changing Prices?

September 01, 2017

Commodity prices are constantly changing with the mining industry on the rise again. One month, copper could be $3 per pound, gold above $1,300 per ounce and iron ore spot prices skyrocketing to above $70 per tonne. While the next month, prices could fall to a yearly low. However, the mining industry is currently on the rise – prices are up, companies have more cash and exploration has increased – and the one thing companies do not want to do is miss the beginning of a boom. Do you have what it takes to see exactly how your business could be affected by volatility?

Volatile prices are part of doing business in mining, and most mining companies use some sort of mining scenario analysis method. But do teams have the ability to easily see the potential financial implications of each change in the industry? Do you?

The single source of truth

Think about it like this: You can spend hours and hours manipulating massive spreadsheets to predict how an increase in prices could affect your free cash flow models, your margins, etc.  But why spend all that time when you don’t have to? Alight Mining Operational Planning can pull all your information into one source of the truth, adjust key drivers and present changes in easy-to-visualize dashboards.

Changing your life of mine plan to better reflect changing prices? Easily convince upper management by running scenario analysis on your new mine plan and show the results on your cash flow models with the confidence that your well-informed decisions are based off multiple cash flow scenarios.

Cash flow scenarios—a peek into the future

With Alight’s Operational Planning, see where your business currently stands by importing historical data through general ledger systems. You can customize the view to fit areas of interest based on the role of the user.  Visually see how cash flow will be impacted by fluctuation in prices through the creation of multiple scenarios.

Planning for initiatives in the long term? Create scenarios to account for the volatility of commodity prices and to make sure you have enough working capital to support your initiative. If you operate a gold mine, you might want to see how a prolonged decrease in gold price of $100/oz. might affect cash flow and initiatives.  Utilize Alight’s application to see the best- and worst-case scenarios.

Don’t get lost in the data

With Alight, gain insights into cash flow fluctuations—and how to manage them—before they happen.

The Alight Mining Solutions team is built on years of mining industry experience combined with the best of the Bay Area’s technological talent. Our experience spans from mining engineering to equipment to finance to metallurgy.