Mine Valuation

Question 1

implies the assigning of a currency value to the worth of a mine or mining project and provides a measure of the desirability of ownership of that property.

Answer 1

mine valuation

Question 2

amount of money which a purchaser desires to pay for the ownership of a mineral property.

Answer 2

Value

Question 3

Valuation vs Evaluation

Answer 3

where evaluation simply focuses on the technical aspects of an asset, and valuation focuses on value of the asset

Question 4

the net sum, over and above the Cost of removal and sale, realized for a property or asset when it is retired from service.

Answer 4

Salvage

Question 5

the property or asset retired from service is scrapped for the value of its materials.

Answer 5

Salvage Value

Question 6

refers to the existing value of a property or asset as determined on the basis of what it would cost to replace the property or its service with at least equally satisfactory and comparable property and service

Answer 6

Replacement Value

Question 7

the original investment in the property or asset as carried on the organization’s books less any cumulative allowance for depreciation or amortization entered on the books.

Answer 7

Book Value

Question 8

the value entered on the official assessor’s records as the value of the property applicable in determining the amount of ad valorem taxes to be paid by the property owner.

Answer 8

Assessed Value

Question 9

refers to that value at which the property has been insured against loss or disaster. This value is generally associated with replacement value for tangible assets and earning capacity for property such as mines (ore deposits).

Answer 9

Insured Value

Question 10

is the sum of discounted future annual net earnings generated by the property; is synonymous with the income approach to value estimation for mining properties

Answer 10

Capitalized Value

Question 11

The process of determining the value or worth of a mining property

Answer 11

> Income/cash flow approach
Market related approach
Cost approach
Option pricing

Question 12

This formula results in an undervaluation of mineral property

Answer 12

Hoskold

Question 13

is the present value of future cash inflows of an investment or project minus the present and any associated future cash outflow; is widely used to appraise a project or investment.

Answer 13

Net Present Value Model

Question 14

If the NPV arrives____________, then theoretically the project or investment should be implemented;

Answer 14

greater than or equal to zero

Question 15

if the NPV is________, the project should be discarded

Answer 15

less than zero

Question 16

What does the Income/Cash flow approach assume

Answer 16

a purchaser would not be justified in paying more to acquire income-producing property than the present value of the income stream to be derived from the property.

Question 17

The income/cash flow apporach is dependent on

Answer 17

reserves, production rate, operating

Question 18

reflects the present value of all estimated future cash flow within predetermined budgetary periods and possible continuing value. These cash flows include: operational expenses, sales income, and dividends. The future cash flow are discounted by the discount factor incorporating adjusted risk factor.

Answer 18

Discounted cash flow (DCF) model

Question 19

This approach is an indicator of market value of an item or any project, including a mineral project. The value of a mine is reflected by balance of supply and demand in the market, particularly for an operating mine

Answer 19

Market (Comparable Sales) Approach

Question 20

The market approach is considered by most appraisers and the courts to provide the best indicator of fair market value, since it reflects _______________ in the marketplace.

Answer 20

the balance of supply and demand

Question 21

The market approach assumes that

Answer 21

a purchaser would not be justified in paying more for a property than it would cost him to acquire an equally desirable substitute property.

Question 22

The practical problems of a market approach when it comes to mining

Answer 22

> there are very few sales of mining properties, and therefore few comparative data are available
since each mineral deposit is unique in quality, size, geographical location, degree of development, and many other parameters, any market data are of modest value at best.

Question 23

The _____ to mine valuation attempts to determine the depreciated replacement cost for the asset in question. That is, what would it cost to reproduce an asset of identical quality and state of repair

Answer 23

cost approach

Question 24

The fundamental concept with the cost approacn approach is____________

Answer 24

that a purchaser would not be justified in paying more for a property than it would cost him to acquire land and construct improvements that had comparable utility with no undue delay.

Question 25

An option’s price is primarily made up of two distinct parts

Answer 25

instrinsic value and time value

Question 26

is a measure of an option’s profitability based on the strike price versus the stock’s price in the market.

Answer 26

intrinsic value

Question 27

based on the underlying asset’s expected volatility and time until the option’s expiration.

Answer 27

time value

Question 28

The primary goal of option pricing theory

Answer 28

is to calculate the probability that an option will be exercised at expiration

Question 29

Options pricing theory also derives various risk factors or sensitivities based on those inputs, which are known as an option’s _____`

Answer 29

Greeks.

Question 30

Purpose Of Mine Valuation Studies

Answer 30

> Acquisition
- Taxation
- Financing
- Regulatory Requirements

Question 31

means that a sum of money is worth more now than the same sum of money in the future

Answer 31

Time value of Money

Question 32

defined as money paid for the use of borrowed money

Answer 32

interest