This page is being edited. It is open as it contains useful information and resources. Please take it as a draft version. Return for a final version in a few days. Meanwhile use what is already available.
In the meantime I will be posting here resources on valuation, namely:
- My presentation at ISG of May 22, 2020: AvaliaçãoActivosMinerais Luís Chambel 2020
- Additional bibliography (links and files) on evaluation, reporting and valuation:
Check regularly; I will be adding and organizing new resources.
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Resources and Reserves
Valuation vs Evaluation
Codes, Standards and Guidelines
IMVAL (INTERNATIONAL MINERAL VALUATION COMMITTEE)
Companies involved in the minerals industry have been exposed to operating in more than one geographical jurisdiction for over a century. This practice has been amplified in recent decades by globalisation of the world economy.
Cross-jurisdictional exposure has required that the way information on mineral assets is reported in the public domain or as industry best practice be standardised in order to provide a common understanding, irrespective of regulatory jurisdiction.
Accordingly, a global committee known as the Committee for Mineral Reserves International Reporting Standards (CRIRSCO) was formed in 1994 to align national minerals reporting codes. CRIRSCO initially published a template in 2006 and updated it in May 2013 to align the national mineral reporting codes. The template fosters a common understanding by harmonising the definitions, classification, estimation processes and the public reporting of exploration results, mineral resources and mineral reserves.
The standardisation of minerals reporting codes is a foundation from which inputs to subsequent valuations are defined. However, despite the various national valuation codes having adequate high-level commonality on some principles, valuation approaches, competence and application of these codes, there are differences that arise in the areas of definitions, some principles and scope that require alignment.
Consequently, the International Mineral Valuation Committee (IMVAL) was formed in 2012 in Australia, primarily to develop a globally acceptable mineral asset valuation (MAV) template by harmonising the valuation codes. There is flexibility for the template to evolve over time to include aspects not initially addressed, such as valuation of mineral corporations and their respective securities, and valuation of oil and gas assets.
USA – SME
AUSTRALIA – VALMIN
SOUTH AFRICA – SAMVAL
CANADA – CIM
CIMVal Standards & Guidelines
Standards and Guidelines for Valuation of Mineral Properties
In March 2003, CIM Council adopted and approved the Standards and Guidelines for Valuation of Mineral Properties (CIMVal Standards and Guidelines), as developed by the CIM Special Committee on Valuation of Mineral Properties (CIMVal).
CIMVal Standards and Guidelines for Valuation of Mineral Properties are to be used by the mining industry in general and to be adopted by Canadian securities regulators and Canadian stock exchanges.
The guiding philosophy and intent of the CIMVal Standards and Guidelines is that Mineral Property Valuations be carried out by appropriately qualified individuals and that all relevant information be fully disclosed. CIMVal specifies requirements for the Qualified Valuator who is responsible for choosing the appropriate approaches and methods for the valuation of mineral properties.
The CIMVal Standards and Guidelines are organized into 2 parts:
- Standards – general rules that are mandatory
- Guidelines – elaborate on the Standards and provide guidance and best practices which are highly recommended
CIMVAL Standards and Guidelines for Valuation of Mineral Properties, 02/2003
CIMVal was adopted by CIM Council in February 2003. CIMVal is also required by the Toronto Stock Exchange – Venture (TSX-V) under its regulations at APPENDIX 3G.
CRIRSCO, Committee for Mineral Reserves International Reporting Standards
The aim of CRIRSCO is to contribute to earning and maintaining that trust by promoting high standards of reporting of mineral deposit estimates (Mineral Resources and Mineral Reserves) and of exploration progress (Exploration Results).
CRIRSCO has published and maintains the CRIRSCO International Reporting Template, first published in 2006. The Template will be kept up to date to reflect new national or international developments.
The IRT will be of great value to any country wishing to develop its own CRIRSCO-type reporting standard. The CRIRSCO Template is also the basis for discussions with organisations including the IASB on standardising the approach of the extractive industries (oil, gas and solid minerals) to resource and reserve definition for financial accounting purposes.
CRIRSCO INTERNATIONAL REPORTING TEMPLATE
FOR EXPLORATION RESULTS, MINERAL RESOURCES AND MINERAL RESERVE
The International Reporting Template (IRT) is a document that draws on the best of the CRIRSCO-style reporting standards, such as the JORC Code (Australasia), SAMREC Code (South Africa), PERC Reporting Standard (Europe), CIM Guidelines (Canada), SME Guide (USA) and Certification Code (Chile). These reporting standards are recognised and adopted world-wide for market-related reporting and financial investment.
The IRT is not intended as an international reporting code per se, and will not supersede the existing national reporting standards. Rather it is a guideline that encapsulates the content of these standards for the benefit of the international mining industry and its various stakeholders. It will be a ‘living document’ that will be continuously updated and improved as new national codes and guidelines are developed.
Public Reports are reports prepared for the purpose of informing investors or potential investors and their advisers on Exploration Results, Mineral Resources or Mineral Reserves.
They include, but are not limited to annual and quarterly company reports, press releases, information memoranda, technical papers, website postings and public presentations.
Modifying Factors are considerations used to convert Mineral Resources to Mineral Reserves. These include, but are not restricted to, mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors.
An Exploration Target is a statement or estimate of the exploration potential of a mineral deposit in a defined geological setting where the statement or estimate, quoted as a range of tonnes and a range of grade or quality, relates to mineralisation for which there has been insufficient exploration to estimate Mineral Resources.
Exploration Results include data and information generated by mineral exploration programmes that might be of use to investors but which do not form part of a declaration of Mineral Resources or Mineral Reserves.
A Mineral Resource is a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction.
The location, quantity, grade or quality, continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling.
A Mineral Reserve is the economically mineable part of a Measured and/or Indicated Mineral Resource.
It includes diluting materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at Pre-Feasibility or Feasibility level as appropriate that include application of Modifying Factors.
Such studies demonstrate that, at the time of reporting, extraction could reasonably be justified.
The reference point at which Reserves are defined, usually the point where the ore is delivered to the processing plant, must be stated. It is important that, in all situations where the reference point is different, such as for a saleable product, a clarifying statement is included to ensure that the reader is fully informed as to what is being reported.
CRIRSCO STANDARD DEFINITIONS, Revised October 2012
The following are the National Reporting Standards that are in accordance with the principles of the CRIRSCO Template:
- Australia: The JORC Code (2012)
- Canada: The CIM Definition Standards for Mineral Resources and Reserves (2014)
- South Africa:
- The SAMREC Code (2016)
- The SAMVAL Code (2008)
- The SAMREC Code (2007)
- Europe: Pan-European Standard for Reporting of Exploration Results, Mineral Resources and Reserves (“The PERC Reporting Standard”) 2013, revision 2.
- Mongolia – Mongolian Code for the Public Reporting of Exploration Results, Mineral Resources and Mineral Reserves (The MRC Code) 2014.
- Russia:The NAEN Code for the Public Reporting of Exploration Results, Mineral Resources, Mineral Reserves.
- United States of America – The SME Guide for Reporting Exploration Results, Mineral Resources and Mineral Reserves (The 2014 SME Guide)
- Chile – Certification Code for Exploration Prospects, Mineral Resources and Ore Reserves (2004):
- English version
- Spanish version
South Africa – SAMCODES
The purpose of the SAMCODES Standards Committee (SSC) is to develop, maintain, administer, ensure compliance with and promote the South African Mineral Codes, collectively known as the SAMCODES. The SSC’s purpose is to ensure that all reports prepared in accordance with the SAMCODES comply with the requirements of the SAMCODES. The SSC aims to ensure the highest ideals of ethics in the professional fields of practice associated with the purpose of the SAMCODE relied upon by the public to provide expert opinion and service, in the public interest.
Attracting finance for exploration and mining ventures is a critical part of the resource business environment today, and there are a number of finance options available, including accessing private equity. With the increase in the number of non-listed (private) companies and individuals seeking to obtain financial assistance, it is important to appreciate that issues of public reporting are not confined to listed companies only.
Under all circumstances, if Exploration Results, Mineral Resources and/or Mineral Reserves are reported publically (as defined in the SAMREC Code of 2016), and if said report is claimed to have been compiled in accordance with any of the SAMREC, SAMVAL or SAMOG Codes, then the report and the author are subject to the minimum standards and requirements of the relevant Code as well as the complaints procedure of the SAMCODES Standards Committee (SSC).
The SAMCODES, the South African Mineral Reporting Codes, set out the minimum standards, recommendations and guidelines for the Public Reporting of mineral related issues in South Africa. They currently comprise three Codes, two Guideline documents and an affiliated National Standard:
- SAMREC: The South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves
- SAMVAL: The South African Code for the Reporting of Mineral Asset Valuation
- SAMOG: The South African Code for the Reporting of Oil and Gas Resources
Commodity, or subject, specific guidelines/standards:
- SAMESG Guideline: The South African Guideline for the Reporting of Environmental, Social and Governance parameters within the mining and oil and gas industries.
- SAMREC Diamond Guidelines: SAMREC Guideline Document for the Reporting of Diamond Exploration Results, Diamond Resources and Diamond Reserves (and other Gemstones, where Relevant).
- SANS 10320:2004: South African guide to the systematic evaluation of coal resources and coal reserves (currently under review). This document is a South African National Standard, published by the South African Bureau of Standards.
CANADA – CIM
International standards for the reporting of Mineral Resources, Mineral Reserves and Exploration Results have been developing at a rapid pace for the past 20 years due to the globalization of the mining industry.
Standards for the valuation of Mineral Properties have followed a similar course. CIM’s website acts as an online “hub” providing access to the standards, guidelines and best practices for reporting and valuation in Canada and globally.
The Standards and Guidelines for Resources and Reserves online resource aims to increase the discussion and promotion of best practices in reporting and valuation. It is guided by an advisory group of experts in the fields of reporting and valuation.
The CIM Estimation Best Practice Guidelines Committee was formed to develop Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines. The General Guidelines document was produced and approved by CIM Council on November 23, 2003. The original committee has not completed further work since that time; however, sub-committees have been established from time to time, to prepare commodity-specific guidelines. Currently, 2 sub-committees are active:
- Following a request from the Ontario Securities Commission, a sub-committee was established to prepare guidelines for the estimation of Mineral Resources and Mineral Reserves for lithium brine deposits.
- Members of the original sub-committee for potash are no longer satisfied with the current potash document. A sub-committee has been established to review and re-write the guidelines
The CIM DEFINITION STANDARDS of May 10, 2014
On May 10, 2014, CIM Council approved the CIM Standing Committee on Mineral Reserve and Mineral Resource Definitions’ request for an update of CIM Definition Standards for Mineral Resources and Mineral Reserves.
The new version includes changes to maintain compatibility with National Instrument 43-101 (NI 43-101), and addresses industry, CSA, CRIRSCO and UN requests for clarification and guidance.
The Canadian Securities Administrators (CSA) have always referenced the definitions and categories of Mineral Resources and Mineral Reserves used in NI 43-101 to CIM Definition Standards for Mineral Resources and Mineral Reserves. In 2011, NI 43-101 also referenced Mining Study definitions for Pre-Feasibility Study and Feasibility Study to the CIM Definition Standards.
PDF – CIM Definition Standards for Mineral Resources & Mineral Reserves 2014
Reasonable Prospects for Economic Extraction
In June 2009, the British Columbia Securities Commission, on behalf of the CSA NI 43-101 Revision Committee, requested that CIM consider several issues associated with the reporting of Resources and Reserves.
In particular, CSA asked CIM to consider providing additional guidance on how qualified persons should determine reasonable prospects of economic extraction for the purposes of establishing mineral resources.
The CIM Reserve Definitions Committee (the Committee) has reviewed the request to provide additional guidance on the “reasonable prospects for economic extraction” clause in the CIM Definition Standards and has reported the findings.
Additional Guidance – Reasonable Prospects for Economic Extraction (12/15/2009)