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  • February 2013
  • Case
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New Earth Mining, Inc.

By: William E. Fruhan and Wei Wang
  • Format:Print
  • | Language:English
  • | Pages:12
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Abstract

New Earth Mining is one of the largest producers of precious metals in the U.S. While the firm operates mines primarily in the U.S. and Canada, it has also made substantial investments in gold exploration projects in Australia and Chile. New Earth has been very successful and has a large amount of cash on the balance sheet, a simple debt structure, and a reasonable leverage ratio with no risk of liquidity. With a strong financial position, the firm considers reducing its dependence on precious metals by diversifying into base metals and other minerals. An investment opportunity for mining iron ore in South Africa looks promising but still carries substantial risk. A high risk of civil war in neighboring countries along with strong fears that the South African government will nationalize mining operations combine to create an unstable political environment. The tentative financing package is complex and creates challenges for determining a value for the project. Students must complete a quantitative analysis of 4 proposals with different valuation methods before making a final recommendation.

Keywords

South Africa; Capital Budgeting; International Business; Return On Investment; Mining; Risk and Uncertainty; Risk Management; Valuation; Investment; Diversification; Mining Industry; Australia; South Africa; Chile; Canada; United States

Citation

Fruhan, William E., and Wei Wang. "New Earth Mining, Inc." Harvard Business School Brief Case 913-548, February 2013.
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About The Author

William E. Fruhan

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Related Work

    • February 2013
    • Faculty Research

    New Earth Mining, Inc. (Brief Case)

    By: William E. Fruhan and Wei Wang
    • February 2013
    • Faculty Research

    New Earth Mining, Inc., Spreadsheet for Instructors (Brief Case)

    By: William E. Fruhan and Wei Wang
    • February 2013
    • Faculty Research

    New Earth Mining, Inc., Spreadsheet for Students (Brief Case)

    By: William E. Fruhan and Wei Wang
Related Work
  • New Earth Mining, Inc. (Brief Case) By: William E. Fruhan and Wei Wang
  • New Earth Mining, Inc., Spreadsheet for Instructors (Brief Case) By: William E. Fruhan and Wei Wang
  • New Earth Mining, Inc., Spreadsheet for Students (Brief Case) By: William E. Fruhan and Wei Wang
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