Energy & resources
Mineral Asset Valuations
Mineral companies need to ascertain the value of their assets from time to time, whether for impairment testing, annual audits or for investor corporate communications.
The value of a mineral asset
A mineral asset can be valued in various ways depending on the project’s stage of development. It can be valued using:
- The cost approach, which relies on historical and/or future amounts spent on the mineral asset;
- The market approach, which determines the monetary value per unit of resource of the project by comparing it with other recent arm’s length transactions; or
- The cash-flow approach, which determines the value of a project based on the ‘value in use’ principle and requires determination of the present value of future cash flows over the useful life of the mineral asset.