Discounted cash flow (DCF) methods are well suited
and recommended as a primary valuation method for
mineral assets for which there are at least indicated
resources and some form of feasibility study containing
engineering, production and capital and operating cost
data. DCF methods are also applicable as a secondary
or check valuation method for exploration properties
for which no technical study has been prepared. For projects where little or no engineering,
production and/or cost data is available, the process of
formulating a project concept by specialists who do not
possess experience and expertise in the relevant technical
faculties is totally rejected as a basis for applying DCF
techniques as a primary valuation method. Such an
approach runs counter to The Australasian Institute of
Mining and Metallurgy (AusIMM) requirement to apply
relevant expertise to specific aspects of mineral
valuation. Technical and commercial inputs to mineral
valuation should be reviewed by specialists who have
specific expertise in the relevant disciplines, and should
be tempered by the quantity and quality of technical
evaluation which has been undertaken and the
development status of the asset.