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Roscoe Postle Associates Inc. has carried out valuations of hundreds of mineral properties. We provide independent valuations of mineral properties from the early exploration stage through to producing mine properties. Independent valuations of mineral properties may be needed for sale or purchase, regulatory requirements for listings or agreements, initial public offerings, mergers and acquisitions, non arms length transactions, due diligence, tax purposes, litigation, insurance purposes, and compensation for expropriated properties. In most cases, value is taken to mean Fair Market Value.
Dr. William E. Roscoe is co-chairman of the CIM Special Committee on Valuation of Mineral Properties (CIMVal), which prepared Draft Standards and Guidelines for Valuation of Mineral Properties.
Producing Mine Properties
Producing mine properties are usually valued by discounted cash flow analysis to derive a net present value. This approach is also used for mineral properties that are sufficiently advanced that reasonable estimates of reserves, costs, etc. are available for cash flow analysis, such as a Pre-feasibility or Feasibility Study.
For producing mines or mines about to go into production, Roscoe Postle Associates Inc. reviews the mine data including an audit of ore reserves, mine plans, and cost and production statistics. Proposed and actual operations are visited and assessed to obtain a thorough understanding of the mining operation, their capacities and costs. Parameters used in the discounted cash flow method include:
- Mineable Reserves, total tonnes and average grade for the life of the mine.
- Metallurgical recovery and payable metal or net smelter return.
- Operating costs for the mine, plant and overhead.
- Capital costs, including sustaining capital and working capital.
- Environmental aspects including permitting and closure costs.
- Depletion and depreciation allowances and applicable taxes.
- Financing costs, if applicable.
- Appropriate discount rates.
Exploration Properties
There are several valuation methods used for exploration properties where resources have not yet been identified or resources exist that have not been demonstrated to be economic. Roscoe Postle Associates Inc. uses three main methods for exploration property valuation:
- Appraised Value Method
- Comparable Transactions
- Option Agreement Terms
Whenever possible, Roscoe Postle Associates Inc. uses more than one valuation method.
Appraised Value Method
The Appraised Value Method, described in articles by Dr. W. E. Roscoe and H. Agnerian, is based upon the potential for the existence of an economic orebody on the property. This potential is appraised at the cost of exploration to test the mineral potential. The two main components of the appraised value of an exploration property are the meaningful past exploration costs and warranted future costs.
Comparable Transactions
Roscoe Postle Associates Inc. monitors the exploration and mining markets and maintains an extensive database of mineral property transactions worldwide. This allows us to derive a range of values of comparable transactions of mineral properties which are situated in similar geologic environments and are bought, sold or optioned off during certain periods of the economic cycle.
Since 1987, H. Agnerian of Roscoe Postle Associates Inc. has compiled some 7,000 mineral property transactions related to base metals, gold and other precious metals, industrial minerals as well as diamond and uranium properties. These transactions are for a wide range of exploration properties as well as for properties in the development stage and for producing mines. The current breakdown of comparable transactions contained in our database is as follows:
| Countries |
Number of Transactions |
| Africa |
400 |
| Asia |
250 |
| Australia and the South Pacific |
130 |
| Canada |
3,970 |
Central America and the Caribbeans
(excluding Mexico) |
100
|
| Europe |
120 |
| Mexico |
390 |
| South America |
810 |
| United States |
830 |
| Total |
7,000 |
Option Agreement Terms
The Option Agreement Terms Method utilizes the financial obligations and option terms in active option agreements to estimate the value of a property.
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