Valuers of mineral properties should be aware that
accountants are a major user of their opinions of value.
Reliance by accountants can range from obtaining
comfort that book values in balance sheets are not
overstated to establishing values by which to assess the
fairness of a takeover offer. Accountants using mineral property valuations
clearly can't be expected to have the same level of
expertise as the valuer and ""second guess"" the valuation.
But they do have an obligation, under the ASC guidelines
and their own professional standards, to'check the logic
and reasonableness of the valuation before being able to rely on it. This means reviewing the valuation report
for general sensibility, discussing the methodologies and
assumptions with the valuer and being satisfied as to
his competence and independence. This paper outlines how accountants use mineral
property valuations, the level of scrutiny applied to
such valuations and the problems commonly
encountered in practice by accountants seeking to rely
on them. The paper also explains how values of-mineral
properties are established in company balance sheets
and why these often differ, quite validly, from fair
market values.