Problem Definition
TitanMine is a mid-tier mining company headquartered in Toronto with $2.8 billion in annual revenue, operating six mines across Chile, Australia, and the Democratic Republic of Congo (DRC). The company produces primarily copper, with a single lithium operation in Western Australia contributing 11% of revenue. Over the past three years, TitanMine's shareholder base has shifted significantly: ESG-focused institutional investors now hold 35% of outstanding shares, up from 12% five years ago.
These ESG investors have issued a public letter demanding TitanMine publish a credible decarbonization roadmap by the next annual general meeting. Simultaneously, global lithium demand is surging at 25% annually, driven by electric vehicle battery production, and TitanMine's board sees a strategic opportunity to reposition as a "green metals" company. The company's current ESG rating of BB places it in the bottom quartile of its peer group, and management believes this is depressing the stock's valuation multiple.
The CEO has retained your consulting team to evaluate three strategic options: (a) invest $800 million to decarbonize existing copper operations through solar-powered mining and electric haul trucks, (b) acquire NovaChem Lithium, a junior lithium producer with an asking price of $1.5 billion, to shift the portfolio toward green metals, or (c) divest the company's highest-emission copper mine and use the proceeds to fund a combination of decarbonization and growth. Which strategic option — or combination — should TitanMine pursue to maximize long-term shareholder value while satisfying ESG commitments?
Additional InformationAsk for more dataHide data
- TitanMine's weighted average cost of capital (WACC) is 10%
- Copper currently trades at $4.00/lb; lithium carbonate at $40,000/ton
- A global carbon levy of $50/ton CO2 is expected to take effect in two years
- The DRC mine operates under a 25-year government concession with 18 years remaining
- TitanMine's current net debt-to-EBITDA ratio is 1.4x; the board cap is 3.0x
- Electric haul trucks have a proven 60% reduction in per-unit energy costs versus diesel
- Total company EBITDA is approximately $883 million
Question 1Structuring
Prompt to candidate: "How would you structure your analysis of TitanMine's three strategic options?"
Hint · Structuring
Build 3–4 branches that are specific to this client and question, not a generic framework. Check they don't overlap and together cover the problem.
Try it first, then checkShow model answerHide model answer
A framework organized into four pillars:
-
Financial Impact
- Upfront capital versus available capacity (debt headroom: (3.0x - 1.4x) x $883M = ~$1.4B)
- NPV of projected cash flows over a 10-year horizon
- Payback period for each option
- Valuation multiple re-rating potential from ESG improvement
-
ESG and Regulatory
- Absolute and intensity-based emissions reduction
- ESG rating trajectory (BB toward A or higher)
- Carbon levy exposure under each scenario
- Investor satisfaction and shareholder base stability
-
Strategic Positioning
- Portfolio mix shift (copper-heavy versus diversified green metals)
- Commodity price exposure and diversification benefit
- Reserve life and long-term production profile
- Competitive positioning relative to peers
-
Execution Risk
- Capital allocation sequencing and financing
- Operational complexity of fleet electrification at remote sites
- M&A integration risk if acquiring NovaChem
- Geopolitical risk (DRC concession stability, regulatory change)
What the interviewer is looking forShow guidanceHide guidance
A strong framework should NOT be a generic M&A or ESG checklist. It must reflect the specific tension in this case: ESG compliance versus growth versus financial returns, and the fact that the three options are not mutually exclusive.
Good (3): Candidate lists evaluation criteria (financial returns, ESG impact, risk) and applies them to each option independently. Covers basic dimensions but treats options as standalone choices.
Level 1: Each option involves a trade-off between ESG improvement and financial cost.
Strong (4): Candidate recognizes that the options are not mutually exclusive and explores combinations. Structures around (1) financial impact (NPV, payback, multiple re-rating), (2) ESG impact (emissions reduction, rating improvement, investor satisfaction), (3) strategic positioning (portfolio mix, commodity exposure, reserve life), and (4) execution risk (capital constraints, operational complexity, geopolitical risk). Explicitly addresses the dual-audience problem: satisfying ESG investors AND growth investors.
Level 2: The real question is not "which option" but "what sequence and combination" maximizes both ESG credibility and shareholder value.
Excellent (5): All of the above, plus the candidate identifies that valuation multiple re-rating may be the largest source of value creation — larger than direct cost savings or revenue growth. Proposes testing the sensitivity of each option to multiple expansion as a key decision variable.
Level 3: The valuation gap between BB-rated and A-rated miners (6.0x vs. 8.0x EV/EBITDA) means ESG improvement is not a cost center — it is the highest-returning capital allocation if the market re-rates the stock. At $883M EBITDA, moving from 6.0x to 8.0x creates $1.8B in enterprise value.
Question 2Numeracy
Prompt to candidate: "Let us focus on Option A. The CEO wants to understand whether the $800 million decarbonization investment pays back within five years. Here is the relevant cost data."
Hint · Numeracy
Write the formula before you plug in numbers, keep units and zeros explicit, and sanity-check the order of magnitude at the end.
Data Provided to CandidateAsk for more dataHide data
| Cost Component | Current Annual Spend |
|---|---|
| Diesel fuel for haul trucks (all copper mines) | $300M |
| Grid electricity (Chilean and Australian mines) | $160M |
| Carbon-related compliance costs | $20M |
Decarbonization plan assumptions:
- Electric haul trucks replace diesel across all five copper mines, reducing truck energy costs by 60%
- Solar installations at Chilean and Australian mines cover 50% of grid electricity needs
- Total CO2 emissions reduction: 800,000 tons per year
- Expected carbon levy of $50/ton CO2 begins in Year 3
- All capital is spent in Year 0; savings begin in Year 1
Try it first, then checkShow model answerHide model answer
Step-by-Step Solution
Step 1 — Annual diesel savings
Current diesel spend: $300M. Electric trucks reduce cost by 60%.
$300M x 0.60 = $180M per year
Step 2 — Annual electricity savings
Grid electricity at Chilean and Australian mines: $160M. Solar covers 50%.
$160M x 0.50 = $80M per year
Step 3 — Avoided carbon levy (starting Year 3)
Emissions reduced by 800,000 tons. Levy rate: $50/ton.
800,000 x $50 = $40M per year (Years 3 through 5 only)
Step 4 — Total annual savings by year
| Year | Diesel Savings | Electricity Savings | Carbon Levy Avoided | Total |
|---|---|---|---|---|
| 1 | $180M | $80M | $0M | $260M |
| 2 | $180M | $80M | $0M | $260M |
| 3 | $180M | $80M | $40M | $300M |
| 4 | $180M | $80M | $40M | $300M |
| 5 | $180M | $80M | $40M | $300M |
Step 5 — Cumulative savings and payback
| Year | Annual Savings | Cumulative | Net vs. $800M |
|---|---|---|---|
| 1 | $260M | $260M | -$540M |
| 2 | $260M | $520M | -$280M |
| 3 | $300M | $820M | +$20M |
| 4 | $300M | $1,120M | +$320M |
| 5 | $300M | $1,420M | +$620M |
Payback period: After Year 2, $280M remains unrecovered. Year 3 savings are $300M.
Payback = 2 + (280 / 300) = 2.9 years
Reality check: A 2.9-year payback on an $800M mining infrastructure overhaul is aggressive. In practice, equipment delivery lead times, permitting delays, and remote-site logistics would likely extend this to 3.5-4 years. Candidates should flag this assumption risk.
What the interviewer is looking forShow guidanceHide guidance
Good (3): Correctly calculates diesel and electricity savings, arrives at approximately $260M per year, and identifies payback around Year 3.
Strong (4): Includes carbon levy timing (Years 3 onward), computes precise payback of 2.9 years, and notes that Option A is financially attractive on pure economics independent of ESG pressure.
Excellent (5): All of the above, plus observes that the $800M investment generates $1.42B in five-year savings (1.78x return), making it a no-brainer on financial grounds alone. Then pivots: Option A solves the cost and emissions problems but does NOT address the strategic portfolio question. It does not increase TitanMine's green metals exposure or satisfy growth investors seeking lithium upside. This reframes the decision from "which single option" to "Option A as the foundation — plus what else?"
Question 3Judgement & Insights
Prompt to candidate: "Please review Exhibits 1 through 3 and tell me: should TitanMine divest the Katanga East mine in the DRC as part of its strategy?"
Hint · Judgement & Insights
Read the exhibit title, axes and units first. Lead with the ‘so what’, then back it with one or two numbers.
Exhibit 1TitanMine Operations by Mine
| Mine | Location | Metal | Revenue ($M) | Prod. Cost ($/lb) | CO2 Intensity (tCO2e/kt) | Reserve Life (yrs) | EBITDA Margin |
|---|---|---|---|---|---|---|---|
| Cerro Alto | Chile | Copper | 520 | 2.20 | 2,800 | 12 | 32% |
| Valle Sur | Chile | Copper | 380 | 2.60 | 3,400 | 8 | 22% |
| Mt. Karratha | Australia | Copper | 480 | 2.50 | 2,900 | 10 | 28% |
| Lake Dora | Australia | Lithium | 320 | -- | 1,800 | 15 | 35% |
| Katanga East | DRC | Copper | 700 | 1.80 | 7,400 | 22 | 45% |
| Cordillera | Chile | Copper | 400 | 2.80 | 2,600 | 6 | 18% |
Company average CO2 intensity: 3,483 tCO2e/kt. Average copper production cost: $2.38/lb.
Source: TitanMine case file
Exhibit 2Global Lithium Market Forecast
| Year | Demand (kt LCE) | Supply (kt LCE) | Deficit / Surplus (kt) | Avg Price ($/ton LCE) |
|---|---|---|---|---|
| 2024 | 820 | 860 | +40 | 22,000 |
| 2025 | 1,020 | 960 | -60 | 30,000 |
| 2026 | 1,280 | 1,100 | -180 | 40,000 |
| 2027 | 1,600 | 1,350 | -250 | 48,000 |
| 2028 | 2,000 | 1,950 | -50 | 28,000 |
Source: TitanMine case file
Exhibit 3Peer ESG Benchmarking
| Company | Revenue ($B) | ESG Rating | Carbon Intensity (tCO2e/$M Rev) | EV/EBITDA | Green Metals (% Rev) |
|---|---|---|---|---|---|
| GreenCopper Inc. | 4.2 | AA | 320 | 9.5x | 40% |
| Atlas Resources | 5.6 | A | 410 | 8.1x | 25% |
| PacificMining Corp | 3.1 | BBB | 480 | 7.2x | 15% |
| TitanMine | 2.8 | BB | 580 | 6.0x | 11% |
| SouthernOre Ltd | 2.0 | B | 720 | 5.5x | 5% |
Source: TitanMine case file
What the interviewer is looking forShow guidanceHide guidance
This question tests whether the candidate falls for the exhibit trap. The "obvious" answer is yes — Katanga East has 2.1x the company's average emissions, and divesting it would dramatically improve TitanMine's ESG profile. The correct answer requires weighing this against the mine's financial and strategic value.
Good (3): Candidate identifies that Katanga East is the highest emitter and recognizes that divestment would improve the ESG rating. May note the mine is also profitable. Stays at surface-level trade-off analysis.
Level 1: Katanga East produces roughly 35% of portfolio emissions. Removing it instantly improves TitanMine's carbon intensity.
Strong (4): Candidate quantifies the financial cost of divestment: $700M in revenue (25% of total), an estimated $315M in EBITDA (36% of total), the highest margin in the portfolio at 45%, and the longest reserve life at 22 years. Recognizes this is a "sell your best asset to look green" problem. Notes that a rational buyer would pay a premium precisely because of the low production cost, meaning ESG concerns are transferred rather than solved.
Level 2: Divestment is cosmetic ESG. It removes emissions from TitanMine's reporting but not from the atmosphere. The buyer will continue operating at the same intensity. Meanwhile, TitanMine loses its most profitable mine and its longest-lived copper asset.
Excellent (5): All of the above, plus the candidate proposes an alternative: concentrate the decarbonization investment on Katanga East specifically, because it has both the highest emissions gap and the highest margin to fund the payback. The mine's 22-year reserve life provides two decades of returns on a fixed decarbonization investment. Additionally, references Exhibit 3 to note that decarbonizing Katanga East could shift TitanMine's carbon intensity from 580 to approximately 370 tCO2e per $M revenue, moving it from bottom quartile to peer median and triggering a multiple re-rating from 6.0x to 7.5-8.0x. Also references Exhibit 2 to counsel patience on the lithium acquisition: the 2028 supply surge (from 1,350 kt to 1,950 kt) will compress prices from $48,000 to $28,000 per ton, reducing NovaChem's fair value by roughly 40%.
Level 3: The mine with the worst ESG profile is also where decarbonization generates the highest ROI — the gap between current and potential emissions is largest at Katanga East, and the 22-year reserve life amortizes the investment over the longest runway in the portfolio. Decarbonizing it transforms a liability into a competitive moat: a low-cost, low-emission copper producer.
Question 4Synthesis
Prompt to candidate: "The CEO has 10 minutes before the board meeting. What is your recommendation?"
Hint · Synthesis
Answer first: the recommendation, two or three reasons with numbers, then risks and next steps.
What the interviewer is looking forShow guidanceHide guidance
Good (3): Clear recommendation for one option with supporting rationale and acknowledgment of trade-offs.
Strong (4): Recommends a combination strategy with sequencing: decarbonize first (prioritizing Katanga East), then selectively pursue the lithium acquisition when pricing is favorable. Supports the recommendation with two or three data points from the exhibits.
Excellent (5): Delivers a phased, board-ready recommendation:
Phase 1 (Years 1-2) — Decarbonize Katanga East first. Allocate $350M of the $800M budget to electrify and solarize the DRC mine specifically. This targets the single largest source of portfolio emissions while protecting the company's most profitable asset. Payback on this tranche is approximately 1.5 years given Katanga's 45% EBITDA margin. Sends an immediate credibility signal to ESG investors.
Phase 2 (Years 2-3) — Decarbonize remaining mines. Deploy the remaining $450M across Chilean and Australian copper operations. Total portfolio emissions drop by 50%. Carbon intensity moves from 580 to roughly 300 tCO2e per $M revenue. ESG rating trajectory: BB toward A within two rating cycles. Expected valuation re-rating: 6.0x to 8.0x EV/EBITDA, creating approximately $1.8B in enterprise value on current EBITDA of $883M.
Phase 3 (Year 3 onward) — Acquire NovaChem at a discount. Wait 18-24 months before pursuing the lithium acquisition. Exhibit 2 shows lithium supply surging from 1,350 kt to 1,950 kt in 2028, compressing prices from $48,000 to $28,000 per ton. At depressed lithium prices, NovaChem's valuation drops from $1.5B to approximately $900M — saving TitanMine $600M. Debt capacity supports this: after decarbonization spend, net debt/EBITDA remains well below the 3.0x cap.
Do NOT divest Katanga East. It is the company's most valuable asset on every financial metric. Divestment is cosmetic ESG — it transfers emissions to the buyer rather than eliminating them. Decarbonizing it instead creates a genuine competitive moat.
Key risk: DRC political instability could disrupt Katanga East operations. Mitigation: initiate early concession renewal negotiations and establish dual-source supply chains for electric truck components.
Contributed by CaseDrill practice community