Difference between a value estimate and an appraisal
Organization: Society for Mining, Metallurgy & Exploration
Jan 1, 2002
The vast majority of valuations produced for mineral properties using the net present value method provide an estimate of investment value or use value. Such an estimate can be a long way from the price that the property would actually sell for if placed on the market. Indicators from the market need to be used to validate or modify the net present value calculation if market value is being appraised. The comparable sales and replacement cost methods used in the appraisal of urban buildings generally fail when used in the appraisal of mineral properties. Other methods of sales analysis are introduced. Guidelines for what a minerals appraisal report should contain are presented.