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THE NET PRESENT VALUE OF SUSTAINABILITY:

Newmont’s Ahafo Mine in Ghana

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100

2003

00400

Mar

ket V

alue

01jan2007 01jan2008 01jan2009 01jan2010

Market Value (TSX) Resource valuation

What Explains the Market Capitalization Discount of Mining Companies?

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.51

1.5

Stak

ehol

der C

onfli

ct/C

oop

0.1

.2.3

.4.5

Mar

ket V

alue

01jan2007 01jan2008 01jan2009 01jan2010

Market Value / Valuation Stakeholder Conflict/Coop

4.1.6. Business value & stakeholder perceptionsStakeholder Sentiment

Ratio

of

/ Val

uatio

n

Witold Henisz

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Henisz, Dorobantu, Nartey 2011 – Analyze market capitalization of population of 21 gold mining firms on Toronto Stock eXchange with 1,2 or 3 gold mines

NPV of gold …………. 22%• Quantity of gold per year, total cost of extraction per

year, futures price of gold per year appropriately discounted

Political/Social ………. 45-65%• Credibility of political institutions (i.e., hard for

governments to renege on deals)• Support from political and social stakeholders (i.e.,

external stakeholders act or speak about the mine cooperatively > conflictually)

Residual ………………. 13-33%

Stakeholder Sentiment Worth 2 X Gold

Witold Henisz

KNOWLEDGE FOR ACTION

FVTOOL, Value Creation via Local Hiring

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FVTOOL, Value Protection

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Integration: FVTOOL, Monte Carlo Simulation

Monte Carlo is a:• Statistical technique

by which a quantity is calculated repeatedly

• Using randomly selected “what-if” scenarios.

• Results approximate the full range of possible outcomes

Value in Billions

Occ

urre

nces

Witold Henisz 7

KNOWLEDGE FOR ACTION

FVTOOL, NPV of sustainability

Dashboard - Total Sustainability Value Added

For $2billion CAPEX project, sustainability investments returned as much as $187 million of NPV.

Witold Henisz 8

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