The relationship between certainty and value in mineral asset management.
Johnny van den Berg, Mining Executive, MineRP
Mineral assets migrate through a logical lifecycle from exploration target to final product. It is critical that mines harvest maximum economic value at each stage during this lifecycle in order to demonstrate the optimum value of the company to the investor.
Calculating Nett Worth
Investors use a variety of instruments to determine the value of natural resource companies- but it all boils down to Nett Worth = Total Assets Total Liabilities.
In this sense mines are particularly interested in how the Mineral Asset component of the Total Assets is derived. The rules for publication of the Mineral Inventory are highly regulated and prescribed by legislation or reporting codes. Published inventories however are open to interpretation by analysts and investors, leaving the question of the intrinsic value of the asset open to speculation. Intrinsic value (of course) lies in the eye of the beholder! The mine owners valuation offen differs vastly from that of a potential acquiring company or a trade union negotiator trying to get maximum benefits for its members.
The fact that mineral inventories only gets published annualy leads to further value speculation - speculation that could easily be avoided through the implentation of accurate, transparent and auditable systems for on-demand reporting and analysis of mineral resources irrespective of their current state.
MineRPs GeoInventory solution removes risk and adds value by reducing uncertainty and ambiguity through regular reporting and more robust reconciliation to the original inventory. Value is added not only through improved understanding of the asset, but also by demonstrating to analysts and investors the value generated by spending capital on Assets Under Construction.
MineRPs GeoInventory and GeoFinance Solutions allow for the cradle to grave management of the mineral asset. This is done through standards-based translation of the impact of mining activities (managed in mining technical systems) into mineral inventory transactions carried in enterprise resource planning (ERP) systems such as SAP. ERP systems track business resources
including raw material and other business fundamentals such as production, supply chain, human resources, assets and others.
Impact on balance sheet
MineRPs GeoInventory solutions potentially impact the balance sheet by increasing the availability, consistency, accuracy, transparency and auditability of mineral asset reports and valuation at every stage of the mineral asset lifecycle.
The diagram above demonstrates the intersection points at which the investor or analyst adds value to mineral assets. Traditionally, these intersections mark the stages at which investors recognise added resource value. The reality is however that mining companies incur the most cost between the reserve and the sold intersections (For some companies this can last as long as 40 months). If the mine can show an ability to consistently perform well in bringing its mineral inventory through the value chain, investors may add additional valuation intercepts, which in turn will lead to a positive re-rating of the company.
For more information about MineRPs GeoInventory and GeoFinance solutions, please visit www.minerp.com, or contact Johnny at email@example.com
ii MARCH 2014 The Journal of The Southern African Institute of Mining and Metallurgy
OFFICE BEARERS AND COUNCIL FOR THE2013/2014 SESSION
Mark CutifaniPresident, Chamber of Mines of South Africa
Susan ShabanguMinister of Mineral Resources, South AfricaRob DaviesMinister of Trade and Industry, South AfricaDerek HanekomMinister of Science and Technology, South Africa
R.T. JonesC. Musingwini
Immediate Past PresidentG.L. Smith
Ordinary Members on Council
H. Bartlett S. NdlovuN.G.C. Blackham G. NjowaV.G. Duke S. RupprechtM.F. Handley A.G. SmithW. Joughin M.H. SolomonA.S. Macfarlane D. TudorD.D. Munro D.J. van Niekerk
Past Presidents Serving on Council
N.A. Barcza R.P. Mohring R.D. Beck J.C. Ngoma J.A. Cruise R.G.B. Pickering J.R. Dixon S.J. Ramokgopa F.M.G. Egerton M.H. Rogers A.M. Garbers-Craig J.N. van der MerweG.V.R. Landman W.H. van Niekerk
Branch ChairmenDRC S. MalebaJohannesburg I. AshmoleNamibia G. OckhuizenPretoria N. NaudeWestern Cape T. OjumuZambia H. ZimbaZimbabwe S.A. GaihaiZululand C. Mienie
Corresponding Members of Council
Australia: I.J. Corrans, R.J. Dippenaar, A. Croll, C. Workman-Davies
Austria: H. Wagner
Botswana: S.D. Williams
Brazil: F.M.C. da Cruz Vieira
China: R. Oppermann
United Kingdom: J.J.L. Cilliers, N.A. Barcza, H. Potgieter
USA: J-M.M. Rendu, P.C. Pistorius
Zambia: J.A. van Huyssteen
The Southern African Institute of Mining and Metallurgy
* W. Bettel (18941895)* A.F. Crosse (18951896)* W.R. Feldtmann (18961897)* C. Butters (18971898)* J. Loevy (18981899)* J.R. Williams (18991903)* S.H. Pearce (19031904)* W.A. Caldecott (19041905)* W. Cullen (19051906)* E.H. Johnson (19061907)* J. Yates (19071908)* R.G. Bevington (19081909)* A. McA. Johnston (19091910)* J. Moir (19101911)* C.B. Saner (19111912)* W.R. Dowling (19121913)* A. Richardson (19131914)* G.H. Stanley (19141915)* J.E. Thomas (19151916)* J.A. Wilkinson (19161917)* G. Hildick-Smith (19171918)* H.S. Meyer (19181919)* J. Gray (19191920)* J. Chilton (19201921)* F. Wartenweiler (19211922)* G.A. Watermeyer (19221923)* F.W. Watson (19231924)* C.J. Gray (19241925)* H.A. White (19251926)* H.R. Adam (19261927)* Sir Robert Kotze (19271928)* J.A. Woodburn (19281929)* H. Pirow (19291930)* J. Henderson (19301931)* A. King (19311932)* V. Nimmo-Dewar (19321933)* P.N. Lategan (19331934)* E.C. Ranson (19341935)* R.A. Flugge-De-Smidt
(19351936)* T.K. Prentice (19361937)* R.S.G. Stokes (19371938)* P.E. Hall (19381939)* E.H.A. Joseph (19391940)* J.H. Dobson (19401941)* Theo Meyer (19411942)* John V. Muller (19421943)* C. Biccard Jeppe (19431944)* P.J. Louis Bok (19441945)* J.T. McIntyre (19451946)* M. Falcon (19461947)* A. Clemens (19471948)* F.G. Hill (19481949)* O.A.E. Jackson (19491950)* W.E. Gooday (19501951)* C.J. Irving (19511952)* D.D. Stitt (19521953)* M.C.G. Meyer (19531954)
* L.A. Bushell (19541955)* H. Britten (19551956)* Wm. Bleloch (19561957)* H. Simon (19571958)* M. Barcza (19581959)* R.J. Adamson (19591960)* W.S. Findlay (19601961)
D.G. Maxwell (19611962)* J. de V. Lambrechts (19621963)* J.F. Reid (19631964)* D.M. Jamieson (19641965)* H.E. Cross (19651966)* D. Gordon Jones (19661967)* P. Lambooy (19671968)* R.C.J. Goode (19681969)* J.K.E. Douglas (19691970)* V.C. Robinson (19701971)* D.D. Howat (19711972)
J.P. Hugo (19721973)* P.W.J. van Rensburg (19731974)* R.P. Plewman (19741975)
R.E. Robinson (19751976)* M.D.G. Salamon (19761977)* P.A. Von Wielligh (19771978)* M.G. Atmore (19781979)* D.A. Viljoen (19791980)* P.R. Jochens (19801981)
G.Y. Nisbet (19811982)A.N. Brown (19821983)
* R.P. King (19831984)J.D. Austin (19841985)H.E. James (19851986)H. Wagner (19861987)
* B.C. Alberts (19871988)C.E. Fivaz (19881989)O.K.H. Steffen (19891990)
* H.G. Mosenthal (19901991)R.D. Beck (19911992)J.P. Hoffman (19921993)
* H. Scott-Russell (19931994)J.A. Cruise (19941995)D.A.J. Ross-Watt (19951996)N.A. Barcza (19961997)R.P. Mohring (19971998)J.R. Dixon (19981999)M.H. Rogers (19992000)L.A. Cramer (20002001)
* A.A.B. Douglas (20012002)S.J. Ramokgopa (2002-2003)T.R. Stacey (20032004)F.M.G. Egerton (20042005)W.H. van Niekerk (20052006)R.P.H. Willis (20062007)R.G.B. Pickering (20072008)A.M. Garbers-Craig (20082009)J.C. Ngoma (20092010)G.V.R. Landman (20102011)J.N. van der Merwe (20112012)
Honorary Legal AdvisersVan Hulsteyns Attorneys
AuditorsMessrs R.H. Kitching
The Southern African Institute of Mining and MetallurgyFifth Floor, Chamber of Mines Building5 Hollard Street, Johannesburg 2001P.O. Box 61127, Marshalltown 2107Telephone (011) 834-1273/7Fax (011) 838-5923 or (011) 833-8156E-mail: firstname.lastname@example.org