Table of Contents

Mineral project valuation
1 General overview of valuation approaches and methodologies
1.1 The Cost Approach
1.2 The Market Approach
1.3 The Income Approach
1.4 Assessing risk and uncertainty
1.5 Discount rates and the cost of capital
1.6 Debt providers
1.7 Valuation of exploration properties
1.8 The Valmin Code

About the Author

Emeritus Professor Odwyn Jones commenced work as a mining trainee with the UK National Coal Board (NCB) in 1950 and was granted an Industry Sponsored Scholarship a few years later to read for a mining engineering degree at the University College of Wales, Cardiff, where he graduated with a BSc with first class honours. He then returned to the industry, obtaining his Colliery Manager’s Certificate.
In 1957 he accepted the position of Lecturer in Mining Engineering at the Royal College of Science and Technology, Glasgow, which later became Strathclyde University. His part-time research, involving both laboratory work and field-testing at a local colliery, was sponsored by the NCB, and he graduated with a PhD from the University of Glasgow in the mid-sixties. In 1970 he accepted the position of Principal Lecturer in Environmental Technology of Buildings at the Polytechnic of the South Bank, London, before moving on to Bristol Polytechnic in 1973 as Head of Department of Construction and Environmental Health. In 1976, Emeritus Professor Jones and his family moved to Western Australia where he took up the joint posts of Principal of the WA School of Mines, Kalgoorlie, and Dean of Mining and Mineral Technology at the WA Institute of Technology, which later became Curtin University. In 1991 he transferred from Kalgoorlie to the University’s main campus in Perth as Director University Development (International) and Director of the Brodie-Hall Research and Consultancy Centre.
Having retired from the University in 1995, he served as Visiting Professor at the Virginia Polytechnic Institute and State University, Blacksburg, for a term before assisting Perth’s Central TAFE in developing its minerals and energy-related programs, where he stayed until 2001. He is a longstanding Member of Engineers Australia, and Fellow of both the Australasian Institute of Mining and Metallurgy and the Institute of Materials, Minerals and Mining (UK). He was Deputy Chairman (1981–98) and Chairman (1998–2013) of the Research Advisory Committee of the Minerals and Energy Research Institute of WA, a Statutory Authority operating under its own Act of Parliament. His recent awards include an Officer of the Order of Australia in 2005 and the Australasian Institute of Mining and Metallurgy’s Service Award for 2012–13. He was inducted into the Australian Prospectors and Miners Hall of Fame in September 2013.

Dr Eric Lilford is a minerals economist and engineer, with interests covering quantitative research, advanced valuation methodologies, determining regulatory impacts on mineral and energy economics to both companies and governments, commodity trends, guiding mining and exploration companies, capital markets and developing and executing economic growth and optimisation strategies. Dr Lilford has multi-commodity and multi-jurisdictional expertise obtained over 29 years in the resources industry in technical, economic, financial, management and academic roles.
His current roles include lecturing and researching in minerals and energy economics at Curtin University and progressing early-stage studies for exploration companies focussed on Sub-Saharan Africa. Dr Lilford retains the position of non-executive Chair of SSC, a South African-based commodities focused company. He has also held the chair of one and the managing director of three ASX-listed companies, as well as NED positions of numerous other listed companies. Prior to this, he was national head of mining and a corporate finance partner at Deloitte Touche Tohmatsu in Perth. Before emigrating to Australia, he was a director of project and business development at BSGR, where he managed aspects of large copper-cobalt projects, mines and plants located in Zambia and the DRC.
Dr Lilford has conducted extensive mining and investment business in more than 22 countries, has presented at numerous conferences world-wide and has authored many peer-reviewed topical articles in high quality journals. Dr Lilford holds a BSc and an MSc in Engineering, and a PhD in Mineral Economics. He is a Fellow of the Australasian Institute of Mining and Metallurgy.

Associate Professor Felix Chan is Director of the Center for Research in Applied Economics (CRAE) at Curtin University and an elected Fellow of the Modelling and Simulation Society of Australia and New Zealand. He has served as an external consultant to the Commonwealth Grant Commission (CGC), Department of Treasury Western Australia and Chamber of Commerce and Industry (WA). He received a bachelor degree in Computing and Mathematical Science in 1996 and a first-class honours degree in Economics in 2000. This also holds a postgraduate diploma in Applied Mathematics and received a PhD in Econometrics in 2005.
Associate rofessor Chan’s research interests include theoretical and applied econometrics, time series econometrics, financial econometrics, panel data analysis, applied statistics, risk management and information theory. He has published widely, including in the prestigious international journals Journal of Econometrics, Econometric Theory, Journal of Applied Econometrics, Econometric Reviews, Scientometrics and International Journal of Forecasting.