Sales transactions are similar.
This price appraisal method uses the transaction value of equivalent assets to set the value for the target asset. The difficulty of this approach in the mining industry is that there is no real asset equivalent, since each asset is unique in terms of geography, minerals, prices, discovery levels and mechanics. Infrastructure. In addition, mining transactions are much less than real estate transactions in general
When these transactions occur, they involve very little money, leaving the assessor to convert the shares, royalties or option contracts to the present value in money equivalents.
Despite the above criteria, the transaction value of equivalent assets may be within a certain range of values for a given asset. Transactions with prospecting mines may also indicate the level of market dynamics at a given moment. For example, in recent years there have been relatively few of these transactions in Canada because of the weakness of the mining industry.
The value of a prospecting mine depends on its potential to exist or it can discover an economically valuable mineral reserve. The potential of a mine depends in part on its area, but its greater dependence on geography, mineralization, mine exploration, neighboring mines and other factors. Similar to real estate, location is paramount. Mines are exploring in established mining areas that are often valuable because of the available infrastructure and the potential for discovering high mineral reserves.
The main strength of this method is the basis for the value measured by other methods and provides a measure of the relative value of an asset.
The biggest weakness is that no two properties are completely similar, each mineral being unique as mentioned above. Subjective assessments are needed to identify similar properties.