Trends In The Regulation Of Mineral Deposit Valuation

Regulation of mineral property valuation methodology by governments and others is due to frauds, condemnation and takings, banking industry problems, and litigation. Definitions of "reserves," "resources," and "qualified person" continue to evolve, along with guidelines to the data and disclosure required to support valuations. A less recognized but vital issue relates to the regulatory acceptability of alternatives to the comparable sales method. Comparable sales generally work well for surface real estate, and sometimes for precious metal deposits, but not at all for most industrial mineral properties. Alternative methods, such as net present value, or a geoscience rating system, often provide better valuations. Yet US regulations dictate comparable sales as the preferred method. The task of convincing regulators of the inapplicability of comparable sales to mineral properties, particularly those lacking reserves, may be as important as the valuation itself.