Predicting Failure of Developmental Gold Mining Projects

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