IC 8422 Mineral Resource Valuation For Public Policy

This Bureau of Mines report is essentially a handbook, or manual, for making the type of mineral resource valuation commonly required for such public policy problems as mineral leasing. The principle of resource valuation through the capitalization of cash flow is well established. A mathematical procedure, based on a simplified accounting system, is detailed for calculating cash flow from revenue, plant costs, and operating expense. Variations of procedure cover cost depletion, percentage depletion, and depletion limited to 50 percent of net income. The influence of the depletion provisions of the tax regulations on the value of a resource to an owner and to an operator is analyzed. The relationship of royalty, bonus payments, and sales price to resource value is also described, and methods for approximating resource values using these payments as input data are developed.