How to price a mineral mine?

M

montysky

Does anyone know how a mineral mine is valued based on reserve size and grade of ore?

For example, if a mine has a reserve of 10 million tons of ore X, and ore X goes for $50.00 per ton for this particular grade. So the market value for this ore reserve is $50 x 10 million = $500M.

Based on that info, what fraction of market value of this ore reserve ($500M) will this mine be priced at? 10%? 20%?

What this fraction be for gold, platinum, titanium, iron, copper, etc?

I think this info is useful for estimating the value of some small mining companies that have big reserves but not yet big revenues.
 
There are many diff gold mines, yet they are priced very diff b/c of management. 2 thoughts:

1. Does the management have a hedging strategy? What is it?
2. Do they intend on producing as much mineral as possible each year or to produce a measured amount each year?
 
Quote from granville:

There are many diff gold mines, yet they are priced very diff b/c of management. 2 thoughts:

1. Does the management have a hedging strategy? What is it?
2. Do they intend on producing as much mineral as possible each year or to produce a measured amount each year?
More...


Well, how about let's assume they do not have any hedging. I am more concern with the value of those untapped mines which they hold rights to exploit. What metric would you use to price them.

Those small companies could be aquisition targets because they hold those rights but not producing.
 
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