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Two Financial Ratios for Mining Exploration Companies

Author

Listed:
  • Bell, Peter

Abstract

This paper presents methods for financial analysis of mining exploration companies. In particular, two financial ratios to compare between companies and over time. The ratios focus on the amount of exploration spending relative to corporate overhead spending and market capitalization. The purpose of comparing exploration spending and overhead spending is to measure relative priority for management subject to financing and other constraints. These two ratios do not measure the quality of the exploration or quality of overhead spending, but they do provide a way to measure the aggressiveness of the management strategy. The paper calculates the two financial ratios for two companies over three years and provides examples of how these two companies use financial ratios in their own financial reporting in ways that are similar to the two new financial ratios. The author is CEO of one of the companies and the timeline under consideration shows a natural experiment before and after the start of the new business strategy.

Suggested Citation

  • Bell, Peter, 2024. "Two Financial Ratios for Mining Exploration Companies," MPRA Paper 121364, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:121364
    as

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    File URL: https://mpra.ub.uni-muenchen.de/121364/1/MPRA_paper_121364.pdf
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    More about this item

    Keywords

    Engineering Economics; Mining; Royalties; Finance;
    All these keywords.

    JEL classification:

    • C0 - Mathematical and Quantitative Methods - - General
    • G0 - Financial Economics - - General
    • L7 - Industrial Organization - - Industry Studies: Primary Products and Construction

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