Techniques and Factors used in South Africa’s Mining Industry to Evaluate Mineral Assets

Abstract

This research study was conducted to identify the techniques and key factors in the mining value chain used by the South African mining industry to establish the value of mineral assets. The major challenges facing future mining operations are that fewer high grade mineral deposits are being discovered, the demand for minerals is increasing, and the innovation to exploit these orebodies requires significant cost efficiency and technology advancement. By analysing the equilibrium between mineral resource, production rate, expenditure and the macro-economic environment, the best practice for mineral asset valuation could be ascertained. This qualitative research conducted a series of interviews utilising the convenience sampling method. The study established that there is a myriad of variables influencing the profitability of mineral assets, but depending on the purpose for valuing an asset, groupings of strategic, technical and economic factors need to be addressed. No mining and processing operation can mimic the original strategic objective or design plan exactly. Therefore, by knowing the parameters within which the operation can be managed and using an appropriate valuation technique, it is possible to assess accurately the extent to which the operation can be successful, sustainable and profitable.