Comparative transactions in project valuation

Author(s): 
Andrew Van Zyl
Date: 
Tuesday, June 27, 2017
First presented: 
SAIMM Mineral Project Valuation Colloquium 2017
Type: 
Published paper
Category: 
Project Evaluation

The Market Approach is one of the key valuation methods and is possibly the most regularly used approach given that it is appropriate for both producing properties and exploration projects. However, particularly in a South African context, there are substantial challenges in finding a reasonable number of comparative transactions.

It is often the practice for companies to use general market averages in the absence of sufficient comparable transactions that would facilitate a statistically robust conclusion. This paper argues that it is more appropriate for the Competent Valuator to use judgement and experience in interpreting, contextualizing and adjusting the more relevant transactions rather than arbitrarily applying average values.
 

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