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Valuation of Exploration Properties

SRK assists in valuation of exploration properties, generally based on percentage of site's metal value.

The May 2007 deadline is looming on the South African mining calendar. That is the date by which anybody who feels aggrieved by the loss of a mineral right under the “old order” must file a legal writ against the Government to retain it.

This date has caused a flurry of requests for valuation of disputed mineral rights. Valuing an early stage mineral property is fraught with difficulty, since the desirability (and hence value) of the site is very much in the eye of the beholder.

There are accepted technical approaches to valuing early stage mineral properties, such as multiples of exploration expenditure, comparable transactions (which are very seldom comparable), in-situ mineralisation and the Kilburn method. All of these require careful consideration and professional experience to apply objectively. SRK has been in the vanguard of making such valuations, and has been involved in several high profile merger/acquisition cases. André van der Merwe recently presented a paper on valuing the properties of Platinum Group Minerals at the 2nd International Platinum Conference held by The South African Institute of Mining and Metallurgy (see figures for some of the findings).

He is also presenting a night class to legal practitioners at the Pretoria Bar on the valuation of mineral properties.

André van der Merwe:

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