{ "docId": "019de073-0e3e-718f-a619-12ed5a3bf0bd", "docSlug": "64ba5cf989a0cf767f243c357144339d", "documentTitle": "TD Securities | Investment Banking Pitch Book | 40 slides", "authorId": "td-securities", "authorName": "TD Securities", "documentKindSlug": "consulting-deck", "documentKindLabel": "Consulting deck", "sourceTypeSlug": "investment_bank", "sourceTypeLabel": "Investment bank", "presentationDate": "2022-06-01 00:00:00", "orientation": "landscape", "aspectRatio": 1.294673, "pageNumber": 15, "pageCount": 40, "prevPage": 14, "nextPage": 16, "slideType": "appendix_methodology", "function": "present_framework", "density": "dense", "nDataPoints": 5, "notes": "Includes specific project risk factors and benchmarking against industry analysts.", "elementsJson": null, "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019de073-0e3e-718f-a619-12ed5a3bf0bd/15", "deckHref": "/decks/019de073-0e3e-718f-a619-12ed5a3bf0bd", "deckJsonHref": "/decks/019de073-0e3e-718f-a619-12ed5a3bf0bd.json", "deckAnchorHref": "/decks/019de073-0e3e-718f-a619-12ed5a3bf0bd#slide-15", "components": [ { "bbox": { "h": 0.05, "w": 0.7, "x": 0.15, "y": 0.9 }, "kind": "disclaimer", "text": "Source: Company reports, Fraser Institute, public filings and research analysts.\n(1) Fraser Institute Annual Survey of Mining Companies 2021 ranks Mongolia 63rd out of 84 jurisdictions surveyed on the Investment Attractiveness Index with a score of 50.66/100.", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "23723919-34b0-4cc8-923e-8d6aee53da24", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.85, "x": 0.08, "y": 0.2 }, "kind": "list", "text": "TD Securities uses as a starting point an 8% discount rate for producing base metal mines and 10% for development stage base metal projects and makes adjustments, as appropriate, for specific risks including geopolitical and technical risks.\nWe believe this methodology is representative of that used by financial and industry participants in evaluating assets.\nPrecious metals consist of less than 20% of contained metal value therefore TD determined that a precious metal discount rate was not appropriate.", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "681d2ae3-6867-4f46-9ab6-dc30dfd83941", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.55, "w": 0.85, "x": 0.08, "y": 0.35 }, "kind": "list", "text": "10% discount rate was selected for the Oyu Tolgoi project\nWorld-class producing asset with an operating open pit, processing infrastructure, and additional near-term production expected from the underground project\nSignificant development component in the underground project which is currently in construction and has commenced initial ore production\nUnderground expansion has experienced several cost overruns and delays\nCurrent risks include COVID-19, inflation, supply disruption, and skilled workforce availability\nIncreased technical risk associated with running a large block cave\nIncremental political and sovereign risk associated with developing and operating a mine in Mongolia\nPast negotiations with Government of Mongolia resulted in forgiveness of US$2.4bn carry account loan\nOngoing discussions include tax arbitration and go-forward funding structure\nAlthough agreements in place, uncertainty related to water and power\nMongolia is landlocked surrounded by Russia and China\nOther data points considered include:\n2020 feasibility study uses an 8% discount rate\nResearch analysts covering Turquoise Hill use 8%-12% discount rate (median of 10%)\nAlthough not often relied on by industry participants, performed empirical WACC analysis", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b4f4a39a-68c6-49f2-b83a-7104c56414fe", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.4, "x": 0.15, "y": 0.06 }, "kind": "title", "text": "TD Securities' Macro Assumptions\nDiscount Rate", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "fbdaff34-dc75-4942-af57-3559e2c1cea1", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [ { "name": "Credibility Transfer", "slug": "credibility-transfer", "agent": "Storyteller", "layer": "slide", "matchId": "019debe5-4587-75fb-8d27-04406c465c54", "evidence": "Discount-rate justified by benchmarking against named industry analysts.", "confidence": 70 } ], "frameworks": [], "arcBeats": [ { "to": 21, "from": 12, "beatId": "019debe5-4058-73a2-bec8-6d72b2ed1298", "arcName": "The Consultant's Gambit", "arcSlug": "consultants-gambit", "beatName": "Solution & Approach", "beatSlug": null, "evidence": "Value Methodology divider, FMV, NAV/EBITDA approach, comparables, synergies.", "position": 3, "confidence": 82, "parentBeatName": null, "parentBeatSlug": null }, { "to": 33, "from": 12, "beatId": "019debe5-410f-70ef-8df5-c8fdb4d7b629", "arcName": "The Triple Take", "arcSlug": "triple-take", "beatName": "The Implications (So What)", "beatSlug": null, "evidence": "Methodology and model establish what the discount/asset is worth.", "position": 2, "confidence": 58, "parentBeatName": null, "parentBeatSlug": null } ], "loops": [ { "to": 17, "from": 13, "name": "Hypothesis Test", "slug": "42-hypothesis-test", "bestFor": "Strategy validation, due diligence, research presentations", "matchId": "019debe5-41a2-743f-8731-ffc719468083", "evidence": "FMV definition, NAV / Future EV/EBITDA approach, discount rate, commodity assumptions, comparable selection criteria.", "position": 3, "objective": "Frame the valuation methodology and assumptions to be applied", "structure": "The Hypothesis -> Test 1 (Supports/Refutes) -> Test 2 (Supports/Refutes) -> Conclusion (Validated/Pivoted)", "confidence": 72, "description": "State a hypothesis upfront, then systematically prove or disprove it with evidence" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }