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WCM in A Joint Venture With ATZ: Risk Assessment Report Executive Summary

Winton Carter Mining is considering a joint venture with ATZ, a state-run mining company, to mine for copper, basalt, coltan, and possibly diamonds in the Kango region. The board assessed risks including medium geological exploitation risk, very high security risk due to instability and crime, high health risks from contaminated water and potential for disease, very high economic risk due to volatility in metals markets and potential election disruption, and high financial risk from currency fluctuations and investment costs. Despite these risks, the board recommends continuing negotiations and eventually signing the joint venture, while implementing measures to mitigate the risks such as a pilot project, water filtration system, and reassuring investors.

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Gabriela Tsacheva
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212 views

WCM in A Joint Venture With ATZ: Risk Assessment Report Executive Summary

Winton Carter Mining is considering a joint venture with ATZ, a state-run mining company, to mine for copper, basalt, coltan, and possibly diamonds in the Kango region. The board assessed risks including medium geological exploitation risk, very high security risk due to instability and crime, high health risks from contaminated water and potential for disease, very high economic risk due to volatility in metals markets and potential election disruption, and high financial risk from currency fluctuations and investment costs. Despite these risks, the board recommends continuing negotiations and eventually signing the joint venture, while implementing measures to mitigate the risks such as a pilot project, water filtration system, and reassuring investors.

Uploaded by

Gabriela Tsacheva
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Gabriela Tsacheva, SB p.59/ ex.

131 – Report
WCM in a joint venture with ATZ: Risk Assessment report
Executive summary
Winton Carter Mining started negotiating with the state-run mining company, ATZ, in order to
enter into a joint venture with them. WCM’s board of directors have fundamentally assessed the
risks associated with this joint venture and their findings were discussed at the last board
meeting.
Introduction
This report will look at:
• the exploitation risk;
• the security risk;
• the health risk;
• the economic risk;
• the financial risk;
• recommendations on the future actions of WCM regarding the new joint venture.
Findings
1. Exploitation risk
The Kango’s region offers the opportunities to mine copper, basalt, coltan and possibly
diamonds. However. geologists do not guarantee gaining profit from the potential deposits. The
risk is medium.
2. Security risk
The country is unstable with high levels of vandalism and crime. Moreover, there have been civil
disturbances in the area recently and, also, there was a demonstration calling for the release of a
rebel leader currently in jail. This risk is very high.
3. Health risk
In the nearby area, water sources are contaminated with waste and debris, and are not suitable for
drinking. Therefore, huge expenses for water supply are required. What is more, mining in there
may result in workers’ suffering from skin diseases due to intense industrial emissions. As a
result, this may outflow into large legal costs in order to support the company. The risk is high. 
4. Economic risk
The cobalt and bauxite markets are booming at present, but the international industrial metals
market is volatile. Overall, long-term risk is low as demand for the metals will definitely recover.
The slowdown in the Chinese economy is continuing to have an effect on commodity prices.
There will be a general election in the country in six months' time. There is potential for
disruption if the results are disputed. The risk is very high.
5. Financial risk
The exchange rate of the local currency is fluctuating. In addition, investments in new expensive
machinery are required, as well as the costs for transport in the mining site. Therefore, the
company will need to borrow money. The risk is high.
Conclusion
Overall, according to the given findings, the board of directors recommend continuing
negotiations with ATZ and, eventually, agree and sign the joint venture.
Recommendations
1. First of all, WCM should implement a small project in Africa where the company would
analyze the products which were gained earlier by the other companies. After that, WCM
may continue the negotiations. This would reduce the exploration risk.

2. The health risk could be minimized by installing a filtration system in order to control the
water contamination.

3. The financial risk could also occur in other countries, therefore WCM should accept it.

4. Thereby, WCM could delicately mention in the prospectus that a new project is in
development in order to show the investors that the company is preparing for the future.

5. Consequently, WCM should organize a meeting with the investors to reassure them how
the company could encounter the possible risks.

Board of directors
8th December

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