Historical Review of Mineral Valuation Methodology

The basic principles of mineral valuation were recognised and propounded at the beginning of this century and have remained virtually unchanged since then. Valuation is seen as a two part process commencing with a technical examination of the mineral property followed by a manipulation of the results of the technical examination in order to determine the monetary value of the project. A thorough and competent technical examination was seen then and remains now as the essential but not sufficient foundation for reliable valuation. All authors stressed the need to maintain the integrity of the data base and to ensure adequate coverage of all relevant aspects. The monetary valuation process through most of the first half of this century was mainly based on the Hoskold two rate method, derived from the formulae for valuing annuities but modified to provide explicitly for recovery of capital. Though the basic principles of valuation have not changed significantly, the means of implementing the components of the technical examination, the styles of deposits being evaluated and the mechanisms of monetary valuation have changed dramatically. Despite all the technological improvements, however, mineral valuations are still as apt to vary from realised performance as at any time in the past. As well, mineral property valuations are now being extended to cover all assets of potential value, including valuation of exploration tenements with or without identified resources. Valuation of exploration tenements will continue to be one of the most difficult and contentious of valuation tasks.