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By Manuel Llosa P

La valuación de una zona minera se da mediante la aplicación de diversos métodos que estén sujetos a los trabajos de exploración y desarrollo, así como el volumen de mineral cubicado. Por ello, la intención de este estudio radica en describir cuáles son los criterios complementarios de valuación que determinen el valor equitativo de un yacimiento minero. Para tales fines, tenemos el objeto de valuación, en tanto represente la tasación, cotización de metales, ampliación de capitales y utilidades correspondientes de la minera. Otro elemento a considerar, son las reservas de minerales, las cuales funcionan como materia prima y deben ser extraídas de acuerdo a la existencia del mineral y la dilución de leyes estimadas. Así también están los costos de producción (gastos de capital y gastos de operación), costo utilitarios, la fórmula de Hoskold, la tasa de redención, tasa de interés, valor de las instalaciones y operaciones diferidas.

Jul 20, 1955

By R. Lawrence

Mineral property valuations to be used for Canadian securities regulatory purposes must comply with CIMVal1. The technical basis for a CIMVal report is the same as that required for a technical report that complies with NI 43-1012. NI 43-101 describes the content to be covered in a technical report, while also covering other requirements, one of which is that the report should be based on a property visit. CIMVal is based on five tenets that the valuator must follow: ? Materiality. ? Independence. ? Transparency. ? Competence. ? Reasonableness. Upon its adoption by CIM Council in 2003, it was hoped that the new CIMVal code would be adopted without change by the several Canadian regulators.

Jan 1, 2011

The United States Civil Service Commission announces open competitive examinations for the positions of valuation engineer, assistant valuation engineer, and valuation aid for the Income-tax Unit of the Internal Revenue Bureau. The duties of these positions will involve the estimating of: (1) The quantity of mineral, oil, and gas or timber; (2) the theoretical and market values of mineral, or oil and gas in place, standing timber, and their products; (3) the value of equipment ordinarily used in discovery, exploitation, and utilization of such natural resources; (4) the cost of development, exploitation, and utilization of such natural resources. The entrance salary for each grade, within the range stated, depending on the qualifications of the appointee, is: Valuation engineer, $3600 to $4800 a year, though in exceptional cases higher salaries may be paid; assistant valuation engineer, $2500 to $3600 a year; valuation aid, $1200 to $2500 a year. Applications for valuation aid must have had a bachelor's degree from a college of recognized standing, graduation from a four years' high-school course, or education equivalent to that required for such graduation, and at least four years' experience in the technical branches of one of the industries mentioned in positions tending to qualify them for the duties outlined above.

Jan 6, 1919

By Oliver Bradley

THE utilization of casing-head gas in the manufacture of casing-head gasoline by both the absorption and the compression method is a most important factor in the conservation of our natural resources.. Any industry connected with the oil business, in general, possesses particular attraction for a large number of people not conversant with its basic principles, for the reason that the large fortunes made in the production and utilization of petroleum and its products have been given undue prominence. The general impression of the public that enormous profits are to be realized in the casing-head gas industry with minimum expenditures of both capital and effort has, in a large measure, accounted for the phenomenal expansion of the industry in recent years and, likewise, has resulted in many mistakes and loss of investment funds. It is true that many installations have been very profitable, but such instances are always the result of careful planning, experienced judgment and conservative estimates. The inception and subsequent activity in the manufacture of casing-head gasoline, enabling the business to assume an important position in the petroleum industry, are of, comparatively recent origin, as its greatest growth, particularly in Oklahoma, occurred during the years 1917 and 1918. Much information must yet be secured and systematized concerning the methods of manufacture of gascline from high-yield casing-head gas, and a large field is still open for the application of accumulated experience and good engineering practice in devising better methods of extracting gasoline from casing-head gas of the poorer grades. The absorption process is coming into general use as a most efficient system of treating casing-head gas, and even so-called dry gas. In fact, there is a decided tendency toward the universal adoption of the absorption process as against compression methods. However, a general discussion of the relative merits of these two systems is not within the scope of this article.

Jan 9, 1920

The valuation of resources companies is open to a huge amount of subjectivity. Not only are valuations subject to fast changing assumptions, such as commodity prices, exchange rates, ore grades, etc., but there is also no common agreement on the methodology to be used. To borrow from Malcolm Fraser, life wasn't meant to be easy for the resource company valuer. I will demonstrate three recent examples of valuations carried out but where the market or actual transactions done show very different results.

Jan 1, 1989

By Lawrence Devon Smith, Keith Spence, William Roscoe

"In March 2003 the CIM Council adopted and approved the document “Standards and Guidelines for Valuation of Mineral Properties” as developed by the Special Committee of the Canadian Institute of Mining, Metallurgy and Petroleum on Valuation of Mineral Properties (CIMVal). The document is referred to as the CIMVal Standards and Guidelines. The document evolved from a specific recommendation by The Mining Standards Task Force (MSTF) of the Toronto Stock Exchange and the Ontario Securities Commission in its Final Report (January 1999) that the CIM form a committee of valuation practitioners to review and advise on approaches to valuation of Mineral Properties. The CIMVal Standards and Guidelines are organized into two parts: •,Standards which are general rules in the Valuation of Mineral Properties. The use of the Standards is mandatory if the Valuation Report is stated to follow CIMVal (although not mandatory in the sense of having regulatory authority). Definitions are given at the beginning of the Standards. •,Guidelines which elaborate on the Standards and, while not mandatory, provide guidance and best practices which are highly recommended to be followed in the Valuation of Mineral Properties.CIMVal specifies requirements for the Qualified Valuator who has the responsibility for choosing the appropriate approaches and methods for the valuation of mineral properties. With regard to the specifics of the application and practice of valuation approaches and methods, CIMVal directs the Qualified Valuator to the large body of published papers, published valuations, presentations and court judgments to guide his or her choice. This is also the approach taken by VALMIN (Australia) and SAMVAL (South Africa). To facilitate the dissemination of industry practice, the CIMVal Committee organized a “Valuation Day” at the CIM Annual General Meeting in Toronto (Mining Millennium 2000), on March 8, 2000. Industry experts presented papers on valuation of Mineral Properties which were subsequently published in a proceedings volume and individually ad technical papers in the CIM Bulletin. The Management and Economics Society of CIM has continued to identify and publish papers on valuation in the CIM Bulletin and Magazine. The present document gathers in one place the CIMVal Standards and Guidelines, the papers from the 2000 Valuation Day, and a number of subsequent papers that illustrate industry practice for the valuation of mineral properties."

Jan 1, 2003

By Carter D

The Chairman of this afternoon's session is Dick Carter. This afternoon is the culmination of this conference. We've looked in the first session at regulation; in the second session at valuation techniques and this session we look at valuation in practice. Dick's involvement in the mineral industry has been wide ranging and distinguished. Dick has worked with BHP since 1960, when he joined BHP Steel as a commercial trainee. Dick holds a B.Comm. from the Newcastle University College of the University of New South Wales and was educated at the Australian Administrative Staff College and Harvard Business School Advanced Management Programme. During the past decade, he has headed the minerals group's Aluminium Divison, Resource Planning and Development, Non-Ferrous Metals and Business Development Organisations. Dick currently serves as Executive Director of BHP Gold Mines Limited and Managing Director of Ok Tedi Mining Limited. His experience covers Australian Manganese Company, Mineral Deposits Limited, Northern Rivers Rutile, Tasmanian Electrometallurgical Company Limited, Mount Newman Joint Venture, Worsley Aluminium and Carnilya Hill Joint Venture Operating Committee. His industry associations include the Executive Board of the Gold Producers Association, the Federal Executive of the Australian Goldmining Industry Council as well as the World Gold Council. Ladies and gentlemen, Dick Carter.

Jan 1, 1989

This paper provides a financial perspective to the valuation of Australian resource companies and projects. Valuation exercises need, however, to be seen in the broader context of a thorough business appraisal, one that incorporates all disciplines employed in the resources industry. Fine tuning a discount rate or determining a particular capital structure is likely to be less important to valuation than an adequate understanding of industry dynamics and a company's likely performance in future years.

Jan 1, 1989

Having worked as a consultant for most of his 40-year working life, mostly as a mineral property valuer, the author has seen many poor valuations. Most were valuations of exploration tenements where the selection of the rather subjective, but necessary, geological inputs raised the main concerns. Those valuations involving iron ore prospects raise particular problems due to the special characteristics of such deposits. Iron ore is more like an industrial mineral rather than precious or base metals and Reserves are determined not by a traditional cut-off grade but by customer specifications. This is intended to be an overview/keynote paper on the current state of the growing (yet consolidating) Australian Iron Ore industry. It has now moved beyond Western AustraliaÆs æPilbara Big TwoÆ of Rio/BHPB (with the emergence of the irrepressible FMG and Hancock Prospecting) to include the YilgarnÆs æMidwest ManyÆ (including US re-entrant Cleveland Cliffs through Portman) and projects in other States. Ore types have moved from haematite Brockman to martite-goethite Marra Mamba (including the RobeÆs mesas and below water table Yandicoogina CIDs) and magnetite ore types. There are DSOs and secondary process feed. Mineral valuers have to reflect today upon these and many other determinants of value when choosing the most appropriate methodologies to adopt when technically assessing and valuing exploration tenements containing iron ore. Set against a frame work of the JORC Code (2004) and VALMIN Code (2005), the general valuation issues involved in using the cost methods (eg multiple of exploration expenditure), market methods (eg comparable sales, rules-of-thumb and joint venture terms) and income methods (eg synthetic discounted cash flow (DCF)/net present value (NPV) modelling) are discussed. Relevant factors when valuing iron ore properties are discussed, eg ore type, lump/fines ratio, stripping ratio, water table, impurities and grade, particularly the JORC confidence category of the identified mineralisation. Remoteness and access to existing rail infrastructure is a key consideration.

Jan 1, 2007

How the Australasian and Canadian Codes (VALMIN and CIMVal) approach mineral property valuation is described. Brief comment is also made on the International Valuation Standards CommitteeÆs interest in a global valuation standard for Mineral (Extractive) Industries and the South African SAMREC initiatives to adopt a VALMIN-like Code. The conventional tripartite classification of valuation approaches into those that are Market-based, Income-based and Cost-based is outlined. It is best practice to use as many of these approaches as possible (and as many methods as reasonable in the particular circumstances), given the quantity and quality of the data available on the Mineral Asset (which depends upon the state of development of the mineral property). The use of specific methods must satisfy the basic considerations of logic and reasonableness and the purpose of the valuation. The competence, judgement and repute of the valuer are critical factors, since all valuations are time and circumstance specific. What constitutes æMarket ValueÆ in the different jurisdictions is discussed and definitions are given. Challenges facing the globalisation of a VALMIN-type Code for the international Minerals Industry are the influence of real estate valuers and the US jurisdictional idiosyncrasies. This is mainly due to a fixation on real property rights with a preference for using real estate-like comparative sales techniques (Market Approach) to the exclusion of Income-based approaches; a regulatory reluctance in the US to accept that Resources have considerable value; and the International Accounting Standards BoardÆs preference for Historical, rather than Current Value, accounting.

Jan 1, 2002

By A. L. Slaughter

A mineral deposit has been discovered and explored sufficiently to establish the presence of ore in ?commercially marketable quantities," This is the point at which exploration ends and development begins, Of course, when the presence of commercially marketable quantities of ore are thought to be present the deposit had to be evaluated before this decision could be reached. If, on the other hand, it was thought that commercially marketable quantities of ore are not present, either more exploration has to be done or the project must be abandoned. It is this decision with which this paper is concerned, more particularly, the influencing factors behind this decision. The final question to be answered is: what profit can my company reasonably expect to make by developing this property and putting it into production? The answer must be expressed as a figure for final profit per ton, money which can be used to pay dividends or to build up cash reserves. Some acquisition cost has probably been paid and the exploration cost incurred at the time of decision, (abandonment or development). In addition to returning these acquisition and exploration costs, the deposit must pay development, mining, milling, capital expense of new plants and equipment, taxes, and various other related costs.

Jan 1, 1958

By D. R. Young

Drilling exploration over the Wesizwe Platinum Limited?s Pilanesberg Project has identified the Merensky Reef at depths varying from 594 m to 1 552 m depth. Merensky Reef thickness varies from 0.05 m to 3.63 m and contains PGE(4) mineralization above a cut-off grade of 1.0 g/t over intersection widths of 0.95 m to 2.63 m. Four distinct facies types have been identified over the property, viz.1) Normal Merensky Reef, generally 1.2 m thick, bounded by thin top and basal chromitite layers and composed of upper feldspathic pyroxenite and lower feldspathic olivine pegmatoids containing base metal sulphide mineralization overlying poikilitic anorthosites. 2) Single chromitite Merensky Reef, generally0.15 m thick and usually devoid of internal silicate material, overlying variable stratigraphy containing significant base metal sulphide mineralization. 3) Detached Merensky Reef, generally1.0 m thick, bounded by thin top and basal chromitite layers and composed of feldspathic pyroxenite or pyroxenite containing base metal sulphide mineralization overlying Merensky Pyroxenite. 4) Normal footwall Merensky Reef, generally 1.8 m thick, bounded by thin top and basal chromitite layers and composed of feldspathic pyroxenite containing base metal sulphide mineralization overlying norites also containing significant base metal sulphide mineralization. The PGE(4) content?s (g/m2) distribution for the global intersection data appears to be lognormal, and conversion to lognormal space produces a near normal distribution which could be interpreted as a compound lognormal distribution. The mean PGE(4) contents estimated by these three different distributions are the same, and thus do not impact on the contained metal. Data for the Normal Merensky Reef facies type are sufficient to indicate that a normal distribution is followed for this facies type, and therefore does not need to be transformed to log space for estimation of the mean and the 90% confidence limits. A global evaluation based on all of the data is compared with a facies-weighted evaluation. The latter method is noted to provide a better definition of the associated estimation errors and thus potential classification of Mineral Resources. A valuation of $20.95 for Inferred and $41.90 for Indicated PGE(4) ounces is applied to both of the evaluations and compared. The global evaluation is considered to over-value the project by approximately 40%, thus indicating that valuations based on global summary sampling data that have a compound distribution may be materially flawed, and that cognizance of the underlying geology is crucial for unbiased valuation.

Jan 1, 2006

By Kenneth A. Grace

Jan 1, 1985

By AIME AIME

A COMMITTEE, representing a number of the larger oil companies in California, met in San Francisco on Nov. 12, 1919, for the purpose of discussing the depletion deductions to be allowed in computing the Federal income taxes under the Internal Revenue Act of 1918. It was the general sense of the committee that a system based on sound engineering principles should be formulated for estimating the value of oil properties, so that better and more uniform results might be obtained by the various companies in filing their returns with the' Bureau of Internal Revenue. A subcommittee, consisting of five petroleum engineers, was thereupon appointed to collect information and draft a report. The committee consisted of G. C. Gester, Carl H. Beal, J. H. G. Wolf, E. G. Gaylord, and E. D. Nolan; this report is the work of that subcommittee.

Jan 1, 1920

Discussion * of the paper of H. M. Chance, presented at the butte meeting, august, 1913, and printed in bulletin No. 79, July, 1913, pp. 1315 to 1341. George H. Ashley,+ Washington, d. C.:-Mr. Chance's long practical experience in reporting on coal lands admirably fits him for a discussion of the value of such lands. On behalf of the government geologists, I wish to express my appreciation of Mr. Chance's friendly, constructive criticism of the government method of valuing coal land in the first part of his paper and, at the same time, to reply to some queries he makes. All admit that coal has no " intrinsic "-monetary value, in the sense that a pound of coal of certain chemical and physical characters is worth " intrinsically " so many cents or fractions of a cent. The term has, however, been found very useful as including those natural factors of coal value, among which are its position and location in the earth, that affect its sale price in contrast with the other cost elements involved in the labor and capital necessary in mining, preparing, transporting, and selling the coal (extrinsic factors). Mr. Chance, while recognizing the " dual origin of value," does not offer any better terms. The survey agrees with Mr. Chance in his definition of coal conservation, that it means the fuller utilization of the heat contents of the coal, and the more complete recovery of the coal from the ground. Coal land withdrawals have not been made to keep such lands off the market, but to prevent their acquisition as non-coal lands before they could be classified so as to be disposed of under the proper law. Nor has the pricing of the more valuable coal lands above the minimum been to raise money for the reclamation fund, to which the money goes, but primarily to discourage the alienation, for holding or speculation, of coal lands not intended or needed for development, and, secondarily, to secure to the people the ?unearned increment," which they are certain in any case to be charged.

Jan 11, 1913

By H. M. Chance

(Butte Meeting, August, 1913.) ADEQUATE treatment of the difficulties surrounding the valuation of mineral lands requires that agreement be first reached defining value as understood for the purpose of appraisal. To define value as the price of a product is not sufficient, and does not assist us in using the factors that cause variations in values and in relative values. The real value of any product depends primarily upon its relation to the necessities, comforts and pleasures of mankind. As the necessities, comforts and pleasures of the civilized races differ from those of more primitive man, the value of products varies with the degree of civilization and the environment of the consumer. Coal has no value to the savages of warm climates, and arrow-head flint none to the residents of New York. It has long been recognized that what has been termed ? intrinsic value " must be limited to materials that are essential to existence-air, water, food. But "intrinsic value" cannot be measured in monetary terms. The intrinsic value of a bushel of wheat is due to the fact that it will support the life of an individual for a certain definite time, but this fact does not enable us to measure or to express that value in monetary terms. It has often been proposed to adopt as a measure of the value of any product the quantity of labor necessary to produce it, but this method is of limited application, and will not apply to what may be termed "intrinsic values." For many reasons it might be well, while assenting to the fact that any material may he intrinsically valuable, to abandon the use of the term " intrinsic value." One of these reasons is the tendency to confuse the idea of intrinsic value with a value that is conferred by economic conditions, that is purely artificial and that may be permanent or evanescent; Intrinsic value must from its nature be permanent and unchangeable.

Jan 7, 1913

By H. M. Chance

(Butte Meeting, August, 1913.) ADEQUATE treatment of the difficulties surrounding the valuation of mineral lands requires that agreement be first reached defining value as understood for the purpose of appraisal. To define value as the price of a product is not sufficient, and does not assist us in using the factors that cause variations in values and in relative values. The real value of any product depends primarily upon its relation to the necessities, comforts and pleasures of mankind. As the necessities, comforts and pleasures of the civilized races differ-from those of more primitive man, the value of products varies with the degree of civilization and the environment of the consumer. Coal has no value to the savages of warm climates, and arrow-head flint none to the residents of New York. It has long been recognized that what has. been termed ?intrinsic value " must be limited to materials that are essential to existence-air, water, food. But " intrinsic value " cannot be measured in monetary terms. The intrinsic value of a bushel of wheat is due to the fact that it will support the life of an individual for a certain definite time, but this fact does not enable us to measure or to express that value in monetary terms. It has often been proposed to adopt as a measure of the value of any product the quantity of labor necessary to produce it, but this method is of limited application, and will not apply to what may be termed " intrinsic values." For many reasons it might be well, while assenting to the fact that any material may be intrinsically valuable, to abandon the use of the term "intrinsic value." One of these reasons is the tendency to confuse the idea of " intrinsic value with a value that is conferred by economic conditions, that is purely artificial and that may be permanent or evanescent. Intrinsic value must from its nature be permanent and unchangeable.

Jan 7, 1913

THE COMMITTEE, appointed early in May, met and organized in Washington, May 9, 1923, and were then advised that such data as they required would as far as obtainable be submitted to them in tabulations, and that they could not be allowed to see the individual reports nor know the identity of the operators on whose reports the figures submitted were based, therefore the Committee's valuation is based on data received from your statisticians, and on tonnages estimated by your staff and by the United States Geological Survey. Various methods of valuation for mining properties have been suggested, but all authorities seem to agree in accepting, as the fairest and most practicable and logical, a capitalization of the estimated future earnings, when such estimate can reasonably be made. Hoover and Finlay both emphasize this. The United States Supreme Court says in Cleveland, Cincinnati, Chicago & St. Louis Railway Co., v. Backus, 154 U. S. 439: But the value of the property results from the use to which it is put and varies with the profitableness of that use, present and prospective, actual and anticipated. There is no pecuniary value outside of that which results from such use. The amount and profitable character of such use determines the value. The Committee on Federal Taxation of the American Institute of Mining and Metallurgical Engineers, appointed in 1919, in its report states: A proper value of a mining property is the present value of the prospective net earnings, taking into account probable variations in output and value. Ingalls (" Wealth and Income of the American People," p. 97) says: The fundamental principle of mine valuation is the present worth of an annual dividend accruing during the period of years corresponding with the life of the mine. It is a convention that the estimated period shall not be more than 30 years.

Jan 1, 1924

By John Dilworth

THIS paper treats primarily of the valuation of developed coal properties by the method of capitalizing their estimated average future earnings. However, in it reference is also made to valuations of undeveloped coal lands and to various methods of appraisal other than by future earnings. FUNDAMENTAL VALUATION PRINCIPLES Before discussing in detail coal property valuations, a few statements bearing on the general subject will be made to present certain of the writer's views on the question as a whole. 1. A certain property at a given time has but, one true value. This is not universally admitted. The appraiser rather frequently finds that a coal owner has in mind three valuations for his holdings; one, the figure at which he feels they should be appraised for taxation purposes; another, the much higher one that should be used if a loan is to he negotiated on the property; and a third, intermediate between the other two, the price for which he would be willing to dispose of his holdings were they for sale. The last is usually nearest to the true value, and because this is so the statement is generally accepted that the fair value of such a property is the price arrived at by negotiation between a willing seller and a willing buyer who are otherwise disinterested. 2. Notwithstanding the foregoing, it is only very generally and approximately true that the proper measure of the value of a given developed1 coal acreage is the unit or per-acre price for which one or more bodies of similar coal in the salve district have been sold recently. To give a few reasons why such a measure of value can not be strictly applied, it may be noted:

Jan 1, 1927

By John Dilworth

IN considering the valuation of industrial properties in general, and of developed coal properties in par-ticular, it is assumed as fundamental that they have but one true value regardless of the object for which they are appraised. As regards developed coal lands, this value is only very approximately indicated by the recent sale price of neighboring lands, for the reason that it is rarely possible to find a sale of a coal property sufficiently similar in essential mining conditions to the one under consideration to serve as a measure of its value; and if such a one is found there are frequently incidental conditions peculiar to this particular transaction which invalidate the use of the sale price as a measure of general values. The true measure of the value of a coal mining opera-tion is the amount and rate of earnings it will afford with intelligent and experienced management. Prac-tically all of the features of a property which are gen-erally recognized as affecting its value relate either to the cost of producing the coal, or to the price it will bring, and so are intimately associated with earnings. In practice it is customary to appraise those portions of a developed coal property which are produced -by the industry of man-mine plant, equipment, development, town, etc.-at their cost of replacement at prevailing prices of materials, machinery, and labor, with such deductions for age, condition, obsolescence, and lack of usefulness as conditions warrant. Surface is appraised at the estimated cost of similar land in the district. Coal value is the difference between the worth of the entire property; considered as an industrial unit and

Jan 9, 1927