Valuation of mineral exploration properties using the cost approach

"Mineral exploration properties are those on which an economically viable mineral deposit has not yet been discovered. Such properties are bought, sold, optioned and joint ventured on the basis of their perceived potential for the existence and discovery of a viable mineral deposit. The intrinsic value of an exploration property is therefore based on the exploration potential. One measure of the exploration potential is the amount that can be justified to spend on exploration for a viable deposit.The appraised value method uses a cost approach to value exploration properties. It is based on the premise that an exploration property is worth the meaningful past exploration expenditures plus warranted future costs to test remaining exploration potential. Results of past exploration work are analyzed in order to retain only those past expenditures that are productive in terms of identifying remaining potential. Warranted future costs comprise a reasonable exploration budget to test that potential."