Predicting Failure of Developmental Gold Mining Projects

Australian Accounting Review, Forthcoming

23 Pages Posted: 5 Jan 2011

See all articles by Andrew Ferguson

Andrew Ferguson

Department of Accounting, UTS

Greg Clinch

Macquarie Business School

Stephen Kean

University of Otago

Date Written: October 1, 2010

Abstract

We investigate firm level financial and non-financial information and their association with project failure for a sample of pre-production gold development firms. We choose pre-revenue generating ‘single project’ mining companies, since project failure is synonymous with company failure for these firms. The setting is interesting due to the high information asymmetry and limitations of the GAAP-based Altman Z-score in this context. We apply a definition of project failure and compare both financial and non-financial predictors. Failure is found to be driven by whether the deposit is open pit or underground, and whether cash cost of production is disclosed at feasibility completion.

Keywords: Failure Prediction, Gold Mining

JEL Classification: L71

Suggested Citation

Ferguson, Andrew and Clinch, Greg and Kean, Stephen, Predicting Failure of Developmental Gold Mining Projects (October 1, 2010). Australian Accounting Review, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1734577

Andrew Ferguson

Department of Accounting, UTS ( email )

PO Box 123 Broadway
Sydney, NSW 2007
Australia
61 2 9514 3565 (Phone)

Greg Clinch (Contact Author)

Macquarie Business School ( email )

Eastern Rd.
North Ryde
Sydney, NSW 2109
United States

Stephen Kean

University of Otago ( email )

P.O. Box 56
Dunedin, Otago 9010
New Zealand

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