3/2012

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18 October 2011, Perth & 17 April 2012, Brisbane

Proceedings

The VALMIN Seminar Series has been developed in conjunction
with MICA – The Consultants Society of The AusIMM

VALMIN SEMINAR SERIES 2011–12

18 OCTOBER 2011				17 APRIL 2012
PERTH, WESTERN AUSTRALIA		BRISBANE, QUEENSLAND

The Australasian Institute of Mining and Metallurgy
Publication Series No 3/2012

The VALMIN Seminar Series has been developed in conjunction
with MICA – The Consultants Society of The AusIMM.

Published by:
The Australasian Institute of Mining and Metallurgy
Ground Floor, 204 Lygon Street, Carlton Victoria 3053, Australia

© The Australasian Institute of Mining and Metallurgy 2012
All papers published in this volume were refereed prior to publication.
The Institute is not responsible as a body for the facts and opinions advanced
in any of its publications.

ISBN 978 1 921522 61 1

Desktop published by:
Kristy Burt, Kylie McShane and Olivia Tet Fong
The Australasian Institute of Mining and Metallurgy
Compiled on CD ROM by:
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CONTENTS
Codes
Codes and Ethics

P McCarthy

3

The VALMIN Code – Some Current Day User Reflections

J S F Dunlop

5

Canadian Standards and Guidelines for Valuation of Mineral Properties– An Update

K N Spence

11

Historic and Current Industry Practices in Public Reporting of Mineral
Assets in Southern Africa – Platinum Case Studies

G Njowa, A N Clay,F T Cawood andC Musingwini

17

Evolution of the VALMIN Code, 2001 - 2005
– What Next?

R N Lees and J J Kelly

31

Valuing VALMIN and the Many Convergences of the Invisible Hand

H R Carmichael

35

Mining and Other Issues in Project Valuation and Independent
Technical Assessment

J S McIntyre

45

Problems in the Preparation of Independent Expert Reports

P Stitt

55

Metallurgical Errors – Where Things Went Wrong

D Connelly

61

The Cost Experience

S Browne and M Fusarelli

67

Meaningful Market-Based Valuation of Exploration Assets

D Lord, P R Williams,
O P Kreuzer andM A Etheridge

75

Metal Transaction Ratio Analysis – A Market Approach for Valuationof Non-Producing Properties with Mineral Resources

W E Roscoe

85

Considerations in Valuing Inferred Resources

M J Lawrence

93

Development and Implementation of a Platinum Group Elements
Mineral Asset Valuation Curve at Venmyn

G Njowa, A N Clay andC Musingwini

103

Are Traditional Property Valuation Methods Appropriate for Extractive
Industry, Industrial Mineral and Landfill Asset Valuations?

D P Herdman

111

Valuing Vendor Consideration – Performance Shares and Options

P Guj, A Chandra
and A Guj

117

Reflections

Valuation Methods

Accounting for Risk
Equator Principles as a Risk Mitigator

A Brett and J Epps

133

Sovereign Risk and Gold Deposit Values

J A Bell, P Guj andC A Standing

141

Using Dynamic Discounted Cash Flow and Real Option Methods for
Economic Analysis in NI43-101 Technical Reports

M Samis, L Martinez,
G A Davis and J B Whyte

149

Author Index

161

Metal Transaction Ratio Analysis –A Market Approach for Valuation of
Non-Producing Properties with Mineral
Resources
W E Roscoe1
ABSTRACTThe fair market value of a non-producing mineral property can be derived using the market
approach, the income approach or the cost approach, depending on its stage of exploration ordevelopment. The market approach, also called the sales comparison approach, can be usedfor valuation of non-producing mineral properties with mineral resources. In addition to therecognised yardstick methods of using value per unit metal contained in mineral resources and theunit value expressed as a percentage of metal price, this paper emphasises the analysis by metaltransaction ratio (MTR) for polymetallic properties with mineral resources containing more than
one metal or other commodity. The MTR is the ratio of the transaction value to the gross dollar
metal content, expressed as a percentage.
The market approach involves identifying and analysing market transactions on non-producing
mineral properties comparable to the property subject to the valuation. Non-producing properties
with mineral resources include those at advanced stages of exploration, properties at theprefeasibility or feasibility stage, properties with currently uneconomic mineral resources, andpast producers. The comparable transaction values, including MTRs, are analysed to determine areasonable range of values to apply to the mineral resources of the subject property. Examples areused to illustrate the methodology.
Selection of comparable transactions should consider factors such as commodities, geologicalsetting, mineral deposit type, stage of exploration and results, quantity and quality of mineral
resources, location and geography, and political jurisdiction. The date of the market comparables
must be within a reasonable time period of the valuation date of the subject property. Although it
is difficult to find good market comparables because of the unique nature of mineral properties andthe small number of transactions, these difficulties are compensated for by analysing a number oftransactions on similar properties to develop a range of values for the subject property.

INTRODUCTION
The purpose of this paper is to describe a market approach forvaluation of non-producing mineral properties with mineral
resources. The paper describes the use of metal transaction
ratio (MTR) for valuation of polymetallic properties withmineral resources containing more than one metal or othercommodity. Some valuation examples are provided toillustrate the methodology and general levels of mineralproperty values.
Valuations of mineral properties are needed for various
reasons, including mergers and acquisitions, non-arm’s lengthtransactions, pricing of initial public offering of securities,
support for property agreements, litigation, compensationfor expropriation, and insurance claims. Independenceof the valuer is usually implicit for these applications(VALMIN, 2005).
Value and valuation in this paper refer to fair market value,or market value. In some circumstances, other definitionsof value may apply, such as fair value, net present value,

replacement value, salvage value, book value, assessed value,
insured value, etc. As it pertains to a mineral property, fairmarket value can be defined as the amount of money or
equivalent for which a mineral property asset should change
hands on the valuation date in an open and unrestricted market
between a willing buyer and a willing seller in an ‘arm’s length’transaction, with each party acting knowledgeably, prudently
and without compulsion. This is adapted from the definitionof fair market value in the VALMIN Code (Definition D43).
As in any valuation, the effective date of the valuation isimportant because mineral property values vary over time,depending on events on neighbouring properties, market
interest, commodity prices and other factors.
Different types of mineral properties require different
valuation approaches and methods (CIM, 2003; Roscoe,
2003, 2007). This paper focuses on the market approach,also known as sales comparison approach, as applied to nonproducing properties with reported mineral resources. Non-

1. Chairman, Roscoe Postle Associates Inc, Suite 501, 55 University Avenue, Toronto ON M5J 2H7, Canada. Email: william.roscoe@rpacan.com
VALMIN SEMINAR SERIES / PERTH, WA, 18 OCTOBER 2011 / BRISBANE, QLD, 17 APRIL 201285

W E ROSCOE

producing properties with mineral resources include those atadvanced stages of exploration, properties at the prefeasibilityor feasibility stage, properties with currently uneconomic
mineral resources, and past producers.
Dollars used in the examples in this paper are US dollars(US$), but could be considered as Australian or Canadiandollars. The abbreviation M is used for millions of dollars orother units.
This paper deals with valuation of mineral properties asassets rather than valuation of companies or business entities
that hold such properties. In many cases, the value of mineralproperties may be the major component of the value of
exploration and mining companies; however, there are othercomponents to the value of a company, including other assets
and liabilities (cash and debt), quality of management, market
recognition and liquidity.

MARKET APPROACH
GeneralThe market approach, or sales comparison approach, is oneof the three generally accepted valuation approaches, theother two being the income approach and the cost approach(International Valuation Standards, 2011; CIM, 2003).
Comparable transactions analysis is a market approach thatuses a number of market transactions on similar properties
to define a reasonable range of values to apply to the subject
property.
Two difficulties with comparable transactions analysis arethat there are no truly comparable mineral properties andthere are few market transactions on mineral properties,
compared to the real estate market (Lawrence, 2001; Roscoe,
2007). Another difficulty is the large amount of variability
in market transaction values. These difficulties can belargely overcome by identifying and analysing a numberof transactions to develop a range of values to apply to thesubject property. A further difficulty is that mineral propertytransaction agreements are often complex and need analysisof the agreement terms to derive a transaction value.
The value of a non-producing mineral property depends on
its perceived potential for the existence and discovery of an
economic mineral deposit (Roscoe, 2007). For non-producing
properties with mineral resources, the value lies in thepotential for the mineral resources to be economically viable
or to be enhanced to an economically viable level. In orderto choose suitable market comparable properties, a numberof factors must be considered. For non-producing properties
with mineral resources, these comparability factors include:•• commodity or group of commodities, eg gold, uranium,
nickel-copper, diamonds•• political jurisdiction•• location, access, infrastructure•• geological setting•• mineralisation type•• stage of exploration or development•• general magnitude and quality of mineral resources•• potential to increase mineral resources•• activity on neighbouring properties•• location in a ‘hot’ area with new mineral discoveries•• environmental, social or political issues as potential
liabilities.
Another consideration in choosing market comparable
transactions is the date of the comparable transactions since
86

market conditions, market activity, commodity prices andthe like change over time. The comparable transaction dates
should be within a reasonable time period of the valuation
date of the subject property and in a time of similar market
conditions. Typical time periods are in the range of two to
three years prior to the valuation date, in order to have similarmarket conditions and commodity prices, and to ensure that asufficient number of transactions are available for meaningful
analysis. When the value per unit metal is normalised as apercentage of metal price or through the use of MTR, a longer
time period can be justified, provided market conditions do
not change substantially during the period.

Mineral resources
Mineral resources as used in this paper generally refer tothose compatible with the JORC Code (2004), CIM Definition
Standards (2010) and equivalent definitions. Measured,indicated and inferred resources are totalled together forthe analysis of comparable transactions and the applicationof value factors to the subject property. There may be somejustification to derive different values for different categories ofmineral resource, but in the writer’s experience it is difficult toderive separate values because of the variability in transaction
value data and the relative scarcity of transactions with only
one category of mineral resource. In general, mineral reserves
have higher unit values than mineral resources, however, only
mineral resources are considered in this paper and in theexamples used.

Analysis of comparable transactions
Once a suitable set of comparable transactions is selected,
the value of each mineral property transacted can bederived. In most cases for non-producing properties withmineral resources, transactions consist of cash, securities
or a combination of the two, and may include a royalty infavour of the vendor. The total property value can be readily
determined with an appropriate allowance for any royalty.
In some cases, transactions may consist of option, farm-in
or joint venture agreements which require some analysis toderive the total property value. More detail on analysis ofsuch agreements can be found in Lawrence (2001) under
Joint Venture Terms Methods and in Roscoe (2007) under
Option Agreement Terms Analysis. The analysis essentiallyconsists of including firm financial commitments, assigning aprobability of realisation to future optional commitments, andmaking an appropriate allowance for any royalty.
The value of the mineral resources of each transacted
property can be calculated and expressed in one or more of
the following three ways:
1. value per unit metal or other commodity contained in themineral resource
2. value per unit metal or other commodity as a percent of
the metal or commodity price3. metal transaction ratio for polymetallic mineral resources.
The value per unit metal contained in the resource (Yardstick
Method in Lawrence, 2001) is derived from the total value ofthe property divided by the units of metal or other commodity
contained in the mineral resource. A simplistic example isgiven below for illustrative purposes:•• 50 per cent interest purchased for $10 M: value of
100 per cent property interest is $20 M•• mineral resources total 5 Mt at 3.1 g/t Au: contained gold
is 500 000 oz•• unit value is $40 per ounce gold.

VALMIN SEMINAR SERIES / PERTH, WA, 18 OCTOBER 2011 / BRISBANE, QLD, 17 APRIL 2012

METAL TRANSACTION RATIO ANALYSIS

Value per unit metal as a percent of the metal price uses thegold price as of the date of the market transaction. This ties thevalue per unit metal in to the metal price at a particular timeand may allow analysis of comparable transactions covering alonger time period since it accounts for the variation of gold
price over time. Using the above example and a gold price of$1000 per ounce, a value of four per cent of the gold price isderived.
Metal transaction ratio can be calculated for mineral
resources that contain more than one metal (Roscoe, 2007).
The gross dollar content of metals contained in the mineral
resource is calculated using metal prices as of the date of themarket transaction. The MTR is the property value divided by
the gross dollar metal content. The MTR is analogous to theratio of unit metal value to metal price. An example is given
below:•• property value is $55 M•• mineral resource is 50 Mt at five per cent Zn, four per centPb and 20 g/t Ag•• contained metal is 5512 M lbs Zn, 4409 M lbs Pb and
32 M oz Ag•• metal prices $1/lb Zn, $0.95 Pb and $20/oz Ag•• gross dollar content of metals $5512 M Zn, $4189 M Pb
and $1286 M Ag – total $10 986 M•• MTR = $55 M/$10 986 M = 0.50 per cent.
Note that the gross dollar metal content cannot be considered
to be a value and is used here only for the purpose of deriving
the MTR. Reporting of such numbers as ‘gross in situ value’and the like is not allowed under JORC or CIM Definition
Standards.
The market comparable transactions are analysed to derive
an appropriate value or range of values to apply to the mineral
resources of the subject property in terms of value per unit
metal, unit value as a percent of metal price and/or MTR.
Considerations in choosing an appropriate range of market
values include:•• examine mean and median values as well as overallvariability and range of values•• consider eliminating outliers at the high and low end of
the value range•• examine possible relation of values to transaction date,size or grade of mineral resource, size of transaction,
political jurisdiction or other factors•• consider which properties are more similar to the subject
property.

EXAMPLES OF MARKET APPROACH
TO VALUATION OF NON-PRODUCINGPROPERTIES WITH MINERAL RESOURCES
Three examples follow of comparable transactions analysis
using yardstick methods and MTR. One is for a single metal
resource property and the other two are for properties withpolymetallic resources. For each of the examples, the valueof each property was derived from published details of thetransaction. If the transaction was for less than 100 per centof the property, the transaction value has been adjusted to a
100 per cent interest in the property. Contained metals havebeen calculated from the published mineral resources withall categories added together, with no allowance for process
recoveries.
First, market transactions are analysed to derive anappropriate range of values and, second, the range of values

is applied to the mineral resources of the subject property.
The transactions were sourced from proprietary databases
compiled by Intierra Resource Intelligence (2011) and Metals
Economics Group (2011) Acquisitions Service.

Example 1 – gold property in West Africa
For valuation of a non-producing gold property in West Africawith mineral resources, 13 comparable gold properties wereidentified for which market transactions had taken place.
None of the 13 comparable transactions were in production
and none contained mineral reserves; all contained mineral
resources. The valuation date of the subject property is late2009 and the comparable transactions were within theprevious three years. Table 1 lists information on the market
comparable transactions.
Value of each transaction is expressed in $/oz gold, whichis the property value divided by the contained ounces, and as$/oz as a percentage of the gold price as of the date of thetransaction. MTR, if calculated, would be the same as $/oz asa percentage of the gold price.
The lower part of Table 1 shows statistics of the transaction
values for all 13 transactions, and for subsets of thetransaction value data. The transaction values range over twoorders of magnitude from $1.36/oz - $125.55/oz and from
0.17 - 16.76 per cent of the gold price. The highest and lowest
values are considered to be outliers, and when they are
removed, the range is reduced by an order of magnitude to$6.17/oz - $49.53/oz and 0.69 - 4.20 per cent of the gold
price. The standard deviation of the values is also reduced
substantially. Without the outliers, the average transaction
values are $22.84/oz and 2.37 per cent of the gold price, andthe median values are $19.64/oz and 2.17 per cent of the gold
price.
Table 1 also shows statistics for two different time periods:
2007 and 2008 - 2009. It can be seen that the 2008 - 2009
mean and median values are significantly higher than thoseof 2007, presumably due to the impact of the global financial
crisis in late 2008. The $/oz and per cent of gold price values
for 2008 - 2009 are therefore relied on more than the 2007
values for derivation of an appropriate range of values toapply to the subject property with a late 2009 valuation date.
The recommended ranges to apply to the subject property
are $24/oz to $30/oz and 2.2 - 3.0 per cent of the gold price.
If the subject property has a mineral resource containing
1.5 million ounces and the gold price at the late 2009 valuation
date is $1100/oz, the subject property can be valued as follows:•• $36 M - $45 M using $24/oz - $30/oz•• comparables range using 2.2 - 3.0 per cent of the $1100
gold price is $24.20/oz - $33/oz•• this results in $36.3 M - $49.5 M as per cent of gold price•• value range for the subject property is $36 M - $47 M inlate 2009 weighting the two equally.

Example 2 – polymetallic property in eastern
CanadaFor valuation of a non-producing Ni-Cu-Co-Pt-Pd-Au property
in eastern Canada with mineral resources, ten comparable
polymetallic properties with a similar mix of metals wereidentified for which market transactions had taken place andfor which mineral resources were reported. The valuation
date of the subject property is early 2011 and the comparable
transactions were within the previous 26 months. Table 2 lists
information on the market comparable transactions.

VALMIN SEMINAR SERIES / PERTH, WA, 18 OCTOBER 2011 / BRISBANE, QLD, 17 APRIL 201287

W E ROSCOE

TABLE 1Comparable transactions analysis for a non-producing gold property in West Africa.
Transaction date

Property value $ M

Contained gold M oz$/oz gold

Price on transaction
date $/oz Au$/oz as % of Au price

2007

333.3

2.66

125.55

749

16.76

2009

200.0

4.04

49.53

1180

4.20

2008

54.5

1.26

43.19

960

4.50

2008

31.3

0.92

33.98

864

3.93

2009

240.0

8.41

28.54

1062

2.69

2009

565.0

22.57

25.03

1040

2.41

2009

4.8

0.25

19.64

917

2.14

2007

346.0

19.09

18.13

834

2.17

2008

31.5

2.74

11.48

915

1.26

2007

4.7

0.55

8.57

749

1.14

2007

6.4

0.92

7.00

719

0.97

2009

2.0

0.32

6.17

889

0.69

2008

1.5

1.08

1.36

804

0.17

All transactions
Mean

29.09

3.31

Median

19.64

2.17

Standard deviation

32.51

4.27

Without highest and lowest values/oz
Mean

22.84

2.37

Median

19.64

2.17

14.77

1.34

Standard deviation

2008 and 2009 transactions without lowest value/oz
Mean

27.19

2.73

Median

26.79

2.55

14.89

1.39

Standard deviation2007 transactions without highest value/oz
Mean

11.23

1.43

Median

8.57

1.14

Standard deviation

6.02

0.65

Recommended comparables ranges for late 2009 valuation date$24 - $30/oz
The gross dollar metal content of the resources for each
property has been derived from the published mineral
resources with all categories added together. The contained
quantities of copper, nickel and cobalt have been calculated
in pounds and multiplied by the published metal prices on
the transaction date. Similarly, the contained quantities ofprecious metals (platinum, palladium, gold, silver, and in
one case rhodium) have been calculated in troy ounces andmultiplied by the published prices on the transaction date. No
allowance has been made for potential recovery of the various
metals. The contained dollar metal contents are summed toobtain the gross dollar metal content of resources listed inTable 2.
The MTR is the value of the transacted property divided
by the gross dollar metal content of the resources and isexpressed as a percentage. Metal prices are those as of thetransaction date.
88

2.2 - 3.0 per cent of price

The lower part of Table 2 shows statistics of the MTR values
for all ten transactions. The transaction values range from
0.15 - 0.99 per cent and the average and median MTR values
are 0.46 per cent and 0.35 per cent respectively. Without thehighest and lowest values, which are not considered to be
outliers, the average and median MTR values are essentiallythe same and the standard deviation decreases slightly.
The range of MTR values recommended to apply to thesubject property is 0.35 - 0.45 per cent. If the subject property
has mineral resources containing 40 M lbs of nickel, 100 M lbs
of copper, 50 000 oz of platinum and 100 000 oz of palladium,the gross dollar metal content of the mineral resources andthe property value are derived as follows, using metal prices
as of the early 2011 valuation date and the MTR range derived
above:•• gross dollar content of nickel – 40 M lbs at $12/lb =$480 M

VALMIN SEMINAR SERIES / PERTH, WA, 18 OCTOBER 2011 / BRISBANE, QLD, 17 APRIL 2012

METAL TRANSACTION RATIO ANALYSISTABLE 2Comparable transactions analysis for a polymetallic property in eastern Canada.
Transaction date

Property value $M

Metals in mineral
resources

Gross dollar metal content
of resources $M

Metal transaction ratio %

2009

1.0

Cu, Co, Au

101

0.99

2011

90.0

Ni, Cu, Pt, Pd

10 075

0.89

2011

7.5

Ni, Cu, Co, Pt, Pd

1107

0.68

2010

14.4

Cu, Pt, Pd, Au, Ag, Rh

2173

0.66

2010

12.6

Ni, Cu, Pt, Pd

3269

0.39

2010

5.3

Ni, Cu, Pt, Pd, Au, Ag

1683

0.31

2011

5.3

Ni, Cu, Pd, Au, Ag

2423

0.22

2009

0.6

Ni, Cu, Co, Pd

337

0.17

2009

6.2

Ni, Cu

3952

0.16

2011

3.1

Ni, Cu, Pt, Pd, Au

2037

0.15

All transactions
Mean

0.46

Median0.35

Standard deviation

0.32

All transactions without highest and lowest metal transaction ratio
Mean

0.44

Median0.35

Standard deviation

0.28

Recommended metal transaction ratio range for early 2011 valuation date

0.3 - 0.5•• gross dollar content of copper – 100 M lbs at $4.30/lb =$430 M•• gross dollar content of platinum – 50 000 oz at$1800/oz = $90 M•• gross dollar content of palladium – 100 000 oz at$770/oz = $77 M•• total gross dollar metal content of mineral resources inearly 2011 = $1077 M•• value range is $3.8 M - $4.8 M in early 2011 based on an
MTR range of 0.35 - 0.45 per cent.

Example 3 – porphyry copper property inSouth America
For valuation of a non-producing porphyry copper property
in South America with mineral resources, nine comparable
gold properties were identified for which market transactions
had taken place. The valuation date of the subject property is
early 2011 and the comparable transactions were within theprevious four years. Table 3 lists information on the market
comparable transactions.
Value of each transaction is expressed in three ways: ascents/lb copper, which is the property value divided by thecontained pounds of copper and converted to cents; as $/lb
copper as a percentage of the copper price on the transaction
date; and as MTR.
The lower part of Table 3 shows statistics of the cents/
lb Cu, the per cent of Cu price and the MTR values for allnine transactions. The highest value/lb and possibly thelowest value/lb are considered to be outliers and, when they
are excluded, the average values decrease and the standard
deviation is reduced substantially. Without the highest andlowest values/lb, the value ranges are from 1.24 - 4.87 cents/
lb Cu, from 0.52 - 1.37 per cent of the copper price and from

0.31 - 1.30 per cent MTR. Note that the MTR values are all
lower than the per cent of Cu price values because the latterdo not account for the other metals in the mineral resources.
The 2009 - 2011 transactions show generally lower averageand median values than the 2007 transactions, presumably
due to the impact of the global financial crisis in late 2008. For
the 2009 - 2011 transactions without the highest and lowest
values, average and median values are as follows:•• average 2.11 cents/lb copper and median 2.16 cents/lb
copper•• average and median both 0.71 per cent of copper price•• average MTR 0.56 per cent and median MTR 0.63 per cent.
The recommended ranges to apply to the subject property
are 1.8 - 2.4 cents/lb Cu, 0.6 - 0.8 per cent of the copper
price, and 0.5 - 0.7 per cent MTR. These ranges rely on the2009 - 2011 transactions without the highest and lowest
values and are based on the average and median values
as well as the variability of the data. If the subject property
has mineral resources containing 8000 M lbs of copper,
400 M lbs of molybdenum and 4 M oz of gold, the gross dollar
metal content of the mineral resources is derived as follows,
using metal prices as of the early 2011 valuation date:•• gross dollar content of copper – 8000 M lbs at $4.30/lb= $34 400 M•• gross dollar content of molybdenum – 400 M lbs at$16/lb = $6400 M•• gross dollar content of gold – 4 M oz at $1500/oz =$6000 M•• total gross dollar metal content of mineral resources inearly 2011 = $46 800 M.
For the three valuation parameters derived from thecomparable transactions, the subject property which has
mineral resources containing 8000 M lbs of copper plus othermetals is valued as follows:

VALMIN SEMINAR SERIES / PERTH, WA, 18 OCTOBER 2011 / BRISBANE, QLD, 17 APRIL 201289

W E ROSCOE

TABLE 3Comparable transactions analysis for a non-producing porphyry copper property in South America.
Transaction
date

Property
value $M

Metals inmineralresources

Contained
copper M lb

Cents/lb
copperPrice ontransaction
date $/lb Cu

Cents/lb as
per cent of
Cu price

Gross dollar
metalvontent of
resources $M

Metal transaction
ratio %

2010

733

Cu, Au

7116

10.30

2.83

3.64%

29 638

2.47

2007

403

Cu, Au, Ag

8275

4.87

3.55

1.37%

31 073

1.30

2007

791

Cu, Mo, Ag

22 088

3.58

3.35

1.07%

123 026

0.64

2011

80

Cu, Au, Ag

2927

2.73

4.54

0.60%

14 594

0.55

2010

72

Cu, Au

2627

2.73

3.33

0.82%

9952

0.72

2010

350

Cu, Mo, Au

21 996

1.59

3.25

0.49%

155 868

0.22

2009

31

Cu, Au

2188

1.40

1.48

0.94%

4175

0.73

2007

194

Cu, Mo15 657

1.24

2.40

0.52%

61 832

0.31

2009

26

Cu, Mo

2422

1.07

3.14

0.34%

11 596

0.22

Average

3.28

1.09%

0.80%

Median

2.73

0.82%

0.64%

Standard deviation

2.91

1.01%

0.71%

All transactions

All transactions without highest and lowest values/lb
Average

2.59

0.83%

0.64%

Median

2.73

0.82%

0.64%

Standard deviation

1.32

0.32%

0.35%

2009 - 2011 transactions without highest and lowest values/lb
Average

2.11

0.71%

0.56%

Median

2.16

0.71%

0.63%

Standard deviation

0.72

0.21%

0.24%

2007 transactions
Average

3.23

0.99%

0.75%

Median

3.58

1.07%

0.64%

Standard deviation

1.84

0.43%

0.50%

Recommended comparables ranges for early 2011 valuation date
1.8 - 2.4 cents/lb•• $144 M - $192 M based on 1.8 - 2.4 cents/lb copper•• $206 M - $275 M based on 0.6 - 0.8 per cent of copper
price of $4.30 lb•• $234 M - $328 M based on MTR of 0.5 - 0.7 per cent•• value range for the subject property is $205 M - $281 M
in early 2011 weighting the MTR value range 50 per centand the other two 25 per cent each, because the MTR
recognises the contribution of other metals in addition tocopper.

CONCLUSIONS

0.6 - 0.8 per cent of price

0.5 - 0.7 per cent metal transaction ratio

normalising values as a percentage of metal price or throughthe use of MTR.
Comparable transactions should have similarity to theproperty being valued in terms of commodities in the mineral
resource, political jurisdiction, infrastructure, geologicalsetting, mineralisation type and the like.
MTR analysis is a useful tool for market approach valuationof properties with polymetallic mineral resources, in addition
to the recognised yardstick methods involving value per unit
metal and unit value as a percentage of metal price.

A non-producing mineral property with mineral resources
can be valued by analysing transaction and mineral resource
data from comparable mineral properties on which market
transactions have taken place.

The value of the subject property is estimated by applying
the range of values per unit metal or other commodity,
per cent of price and/or MTR to the mineral resources ofthe subject property. A single value can be selected from therange of values if required.

A number of comparable transactions should be used in theanalysis to compensate for a small market and variability inthe values. Comparable transaction dates should be withina two to three year period prior to the valuation date of thesubject property, although a longer period can be justified by

The writer acknowledges the assistance of R B Cook andP Chamois in compiling comparable transactions data andD A McCombe for reviewing this paper.

90

ACKNOWLEDGEMENTS

VALMIN SEMINAR SERIES / PERTH, WA, 18 OCTOBER 2011 / BRISBANE, QLD, 17 APRIL 2012

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VALMIN SEMINAR SERIES / PERTH, WA, 18 OCTOBER 2011 / BRISBANE, QLD, 17 APRIL 201291