Mining industry valuation approach

In general assessment of mining assets, both for the sake of financial reports or other interests to be divided into two activities, namely
(1) assessment of non-reserve assets, and
(2) assessment of the assets Backup 

In the assessment of mining assets, the approach and method of assessment is used together with other objects of property assessment. The third approach can be applied in assessing the mining assets, namely: 

  1. Cost Approach 
  2. Market Data Approach 
  3. Income Approach 

The third approach to the implementation of the above, depending on the very stage of development in the mining. 

Mining assets consist of: 

A. Reserve: 

Stage approach to research and exploration costs and Market Data Approach 
Phase Development Approach and Income Data Market Approach 
Production stage approach and Income Data Market Approach 

B. Non-Reserve: 
Land: Market Data Approach 
Buildings, facilities improvements : Cost Approach 
the dock : Cost approach
Machinery and Equipment: Cost Approach 
Ship (Vessel) cost approach & Data Market 
Barge cost approach & Data Market
The instrument approach to weight and cost approach Data Market 
Vehicle Market Data Approach 
Inventory Office Market Data Approach 

Non-Reserve Assets Vakuation 
Rating supporting infrastructure assets includes land, building the company's assets, building housing, infrastructure, docks, assets, vehicles & equipment, machinery and other equipment, inventory and office processing unit (Factory) is done with the cost / data market, as the assessment other properties. 

Reserve Assets Valuation
To reserve assets in general, the reserves are assets that measurable. The approach used is the assessment approach Income (Income Approach) method which is often used discounted cash flow. This is because these assets have the characteristics of the cycle of income that is not stable. The feasibility of mining influenced by the level of demand for the supply of commodities on the end result of the mining, mineral assets, which are limited. 

The determination of the value of reserves is done with calculations based on estimates that revenues will be obtained in future years during the age of mine and translated into the current value. In this method asset value of reserves does not include the value of assets, non-operational units and other assets. 

To obtain the value of reserves from the results of the assessment of mining with the approach of income (Income Approach) often carried out through the extraction technique, namely: Value Mining obtained by the approach of income reduced by the value of the land, the value of non-reserve assets such as buildings, infrastructure, vehicles and heavy equipment, machine - machinery & equipment other (obtained with the method of approach cost) will be the value of reserves. 

There are several steps that are generally required to use the technical approach discounted cash flow, namely: 

1. Calculating Net Income projections from the annual mining production 
2. Estimation design and Operating Cost from variable costs, fixed costs and the costs of reserve assets of the replacement. These costs can be made in accordance with the postal expenditures as follows: 

a. Exploration costs 
b. Cost of exploitation: 

  • Preparation costs and the cost of cleaning, 
  • the cost of removing overburden / man, 
  • Cost excavation / blasting and loading minerals. 
  • Cost of carriage to the place of improved / stockpile. 
  • Cost of road maintenance 
  • Direct labour cost 
  • The cost of fuel and lubricants 
  • Cost of treatment of heavy equipment 
  • Cost reclamation / closure of the mine 

C. Cost of processing or purification / extraction: 

  • The cost of processing, including chemicals (if any) 
  • Direct labour cost 
  • Cost of fuel and lubricants 

D. Marketing costs 
E. General and administrative costs 
F. Cost of treatment: heavy equipment, machinery and electrical, docks, other operational assets, infrastructure 
Cost Reserved: heavy equipment, machinery and electrical, docks, other operational assets, infrastructure 
The cost of listing stockpile to Ship / Vessel: 
The cost to the barge loading (Barge loading) 
Cost of carriage with a barge (barging) 
Cost unloading (Steve doring) in the Vessel 
Cost analysis in the laboratory or in the barge Vessel (especially coal) 
Cost anymore free 
Cost of retribution 
Cost of land and building tax 
Insurance costs 
Mining a reasonable profit 

Calculate the net annual income, derived from the difference between gross income with the cost of operations. Discount process, during the period or the period of mining operations with the productive Discount Rate to take a reasonable and still considers the data the market besides the possibility of risks from the property or business.

Source: UJP Pangaloan, ujp.pangaloan@gmail.com