If so, the cost of the royalty should be capitalized into inventory, so that it gets charged to expense when the inventory is sold. I also know that the average all-and-sustaining cost to operate the mine is about $900 dollars per ounce.
- The mining industry is involved in the extraction of precious minerals and other geological materials.
- Since its introduction in the nineties, the field of text mining has presented itself under a variety of names, such as ‘Knowledge discovery from text (KDT)’, ‘Intelligent Text Analysis’ and ‘Text Data Mining’ (Sumathy and Chidambaram, 2013, Feldman and Dagan, 1995, Hotho, 2005).
- At that point, you can start amortizing the costs that were capitalized during the development stage.
- Once all the ore has been extracted, the mine closure process begins, which can last for several years.
- Then it has to decide whether it would be economical to build the mine, and only then can it begin developing the property.
From an accounting perspective, insight is given into the knowledge that could be obtained by introducing text mining techniques in an accounting environment. On the grounds that the field of text mining is marked by continuous growth, this study’s significance chiefly resides in its contemporaneity and its evaluation of some of the most recent text mining applications in accounting. Moreover, no prior restrictions were made on the methods or textual sources used within the accounting applications considered for discussion. The mining industry is one of the most lucrative sectors in the United States. This industry continues to provide enormous opportunities for businesses and investors, from gold and silver to copper and coal. However, with tremendous rewards come significant responsibilities, including the need for accurate accounting and bookkeeping practices.
Using pattern analysis methods to supplement attention directing analytical procedures
Its acclaim has only grown over the years as Big Data, increasing computing power, and the recognition of search engines allowed text mining techniques to improve in both accuracy and efficiency (Loughran and Mcdonald, 2016, Kearney and Liu, 2014). The applications of text mining are broad, and therefore discernible in numerous domains how to prepare a balance sheet for a startup company and industries, including accounting. The literature stream on text mining in accounting explores the value of different qualitative (‘soft’) measures and text mining techniques in accounting practice; to elucidate, complement, and validate the already available quantitative information (e.g. Brazel et al. (2009, ?, ?)).
Infrastructure development also takes place at this stage as mines are often located in remote areas that require construction of roads and electricity. The mining industry is involved in the extraction of precious minerals and other geological materials. The extracted materials are transformed into a mineralized form that serves an economic benefit to the prospector or miner. Typical activities in the mining industry include metals production, metals investing, and metals trading. The ratio takes the adjusted cash flow of the business in a given year (i.e. 2018E) and compares that to the share price. NAV is a sum-of-the-parts approach to valuation, in that each individual mining asset is independently valued and then added together.
Then it has to decide whether it would be economical to build the mine, and only then can it begin developing the property. In these early stages, there isn’t necessarily any prospect of having a viable business, so all of the expenses incurred have to be charged to expense as incurred. Companies should make efforts to identify the “right” long-term investors and counterparties for them, with the right risk profile. The structuring and management of such agreements is also complex, involving sophisticated forecasting (such as predictive pricing and determining future production of a mine for streaming agreements). However, for companies that are able to take action to shore up their financing and maintain through-cycle investments, there are likely to be considerable gains.
Global Production Team (India)
The next phase in the life of a mine is the production phase, which should last a fairly long time. The most unique accounting issue in this phase is inventory valuation, because it isn’t necessarily all that precise. This means the company has laid out some sort of impermeable pad and dumped a massive amount of low-grade ore onto it. Meru Accounting provides world-class services that cater to all the needs of cloud accounting and bookkeeping of your business. In the mining industry, various accounting and bookkeeping techniques are used to keep track of finances. The other cost that can come up later in the life of a mine is environmental obligations.
AutoEntry captures, analyses and posts invoices, receipts and statements into your accounting solution. Gusto offers fully integrated online payroll services that includes HR, benefits, and everything else you need for your business. With Hubdoc, you can automatically import all your financial documents & export them into data you can use. Yet another inventory issue is that the mine might very well have to pay a royalty to the owner of the land.
Accounting for Mining (#
This number is likely to change, as the closure date of the mine approaches and the company clarifies just how much it’ll need to spend; so the related liability will also change. The accountant may find that this is the largest liability on the balance sheet, so it pays to keep close track of the amount of the liability, and how it’s been calculated. At that point, you can start amortizing the costs that were capitalized during the development stage.
Alternative financing in mining
Gain unlimited access to more than 250 productivity Templates, CFI’s full course catalog and accredited Certification Programs, hundreds of resources, expert reviews and support, the chance to work with real-world finance and research tools, and more. We work on virtual technologies like Team Viewer, Virtual Private Network (VPN) to share and access data from your system.You have to share your accounting software login details. Bookkeepers ensure that all financial records are accurate by recording transactions such as payables/receivables processing, payroll management, and tax preparation. So, if the capitalized amount of development costs is $1 million, and the mine has just produced 2% of the total amount of expected ore, then you can charge 2% of that $1 million to expense in the current reporting period. Once the operation is ready to begin, the asset officially becomes an operating mine. During this phase, the ore is extracted, processed, and refined to produce metal.
Text mining applications in accounting practice
Consequently, the amount of the environmental cleanup obligation will vary not just based on the latest cost estimate, but also on the ability of the other responsible parties to pay for their shares of the bill. This is a moving target for the accountant, who can expect to issue revisions to this accrued liability on a very regular basis. It’s not that easy to figure out the amount of this cost, because the mining company might end up sharing responsibility for the obligation with other parties. For example, a mining company buys a mine from another mine operator, and then the Environmental Protection Agency declares the area a Superfund site.
In this case, both the current and former owners share responsibility for the cleanup. Then it drizzles some fairly nasty chemicals onto the heap, like sulfuric acid or cyanide, which dissolves out the metals being mined. The dissolved metals are then collected and subjected to further treatment in a processing plant. The accountant recognizes an inventory asset from the ore stacked on the pad by measuring the size of the heap and then factoring in the proportion of expected metal recovery. If so, the accountant needs to measure the pile to determine the amount of inventory to recognize. Projects in the mining industry can be broken down into the exploration and feasibility stage, and the planning and construction phase.
We estimate a further $15 billion in financing potential for alternative energy projects (primarily solar power),15Assumes approximately 1,000 mines that could most credibly transition to alternative energy, and through-life project value of some $20 million per mine. This could represent a considerable opportunity for infrastructure investors looking for lower-risk assets in the sector. Alternative financing has grown significantly over the past decade and today represents more than $8 trillion in total assets under management.1P&I, Top Global Asset Managers’ AUM, 2017. Mining, however, remains underpenetrated, representing less than 1 percent of total global alternative financing.2Silver Wheaton, 2016; PitchBook, 2019.
With proper accounting and bookkeeping practices, mining companies can make informed decisions based on real-time data. The ambition of our study is the realisation of a representative, critical overview of the potential applications of text mining in accounting. On that account, an extensive literature review is conducted, covering both text mining applications in accounting and text mining techniques that have previously been declared to be useful in an accounting context. A schematic overview of the literature review process can be found in Fig. The mining industry has a lot of opportunities if the investment is made carefully.
We understand the intense pressure and scrutiny you face as you work to deliver crucial materials that keep the world moving. Our experienced team has the knowledge and resources to provide mining advisory services that help you seize opportunities and reach your strategic objectives. By planning for the future while remembering lessons of the past, we’ll put you on the road to long-term growth and achievement.