Valuation of mineral deposits some basic methods
The process of a mining project involves the following stages: Exploration, assessment, project construction and mining. At each stage, investors should prepare for different tasks in terms of finding and collecting information, feasibility studies, resource assessments, and deeper assessments of reserves.
Process characteristics of a mine project
The process of a mining project involves the following stages: Exploration, evaluation, project construction and mining. At each stage, investors should prepare for different tasks in terms of finding and collecting information, feasibility studies, resource assessments, and deeper assessments of reserves.
Based on each of these stages, valuation will yield results with varying degrees of reliability.
In developed mining countries, separate standards for mine valuation have been issued to guide accurate mine valuation. CIMVal Standards & Guidelines - Canada, Australian VALMIN Code - Australia, SAMVal Code - South Africa, US Minerals Appraisals / Valuations - US Valuation Standards, International Valuations Standards (IVS) International valuation standards also have separate provisions on mine valuation.
Major mine valuation methods
These factors influence the selection and use of real estate valuation methods in mining valuation:
Comparative method
From a theoretical point of view, the comparative method is the optimum method for evaluating asset prices in general for the purposes of trading and contributing capital to investment. The optimization of the comparative method is based on solid market fundamentals, market evidence of similar asset purchases.
In order to apply a good comparison method, the following conditions must be met: the quality of information must be adequate, adequate, reliable and verifiable; The market must be stable, if the market fluctuates, there will be big errors, even if the subjects compare in many aspects.
Under current conditions in our country, the mines valuation has not been implemented so this method has no meaningful use. Collecting market evidence of real estate transactions in general and mining rights to solid minerals in Vietnam is difficult because mineral resources are national and most of the time. In recent years, mining companies are state-owned enterprises so there is no trading activity
In the future, when some mines are popular, geological structures are not too complicated and relatively homogeneous (such as construction material mines: limestone, sand, clay ...) It is possible to apply the valuation method to satisfy the above requirements.
Income approach (investment)
Income approach refers to the income stream formed from the mining and trading of mineral deposits. According to this principle, in theory, the current market price of a mineral deposit equates to the present value of all future earnings that may be obtained from the property. Therefore, the method of income has taken into account the advantages brought about by the specific conditions of the mineral deposits such as location; mining geological conditions, mining technology, etc., and these factors are addressed in mine investment projects. As a result, the results of the project's economic impact assessment have indirectly reflected the market value of the mineral deposit. From a theoretical point of view, this method has the advantage of having the strongest rationale, as it directly accesses the benefits that real estate or mineral deposits bring to the investor.