“the value of something is in the eye of the beholder”…
An acceptable monetary value for a mining asset is to be determined between parties in discussions, however this is a common misconception. Even though the final figure is agreed between the parties involved, when funds are provided by a public entity, the inherent value must be deemed ‘reasonable’ by the wider market and/or stakeholders. As such, purpose of the VALMIN Code provides guidance to practitioners and common grounds to ensure the value of assets are estimated to a ‘reasonable’ amount.
Even though the Corporations Act 2001, the Guidance Notes and the FAQ’s on the Australian Securities and Investments Commission (ASIC) website, applying VALMIN code is the bridge between legal professionals, corporate finance and geologist (and mining engineers) with elements that could be slightly subjective, by setting a clear work frame.Now in its fourth iteration (1995, 1998, 2001 and 2015) the ‘Australasian Code for Public Reporting of technical assessments and valuations of mineral assets’ (VALMIN Code) sets out minimum requirements for the technical assessment and valuation of mineral assets and securities. The Code is suggested as guidance for good practice in valuing petroleum assets and securities. It is a companion to the JORC Code, which sets out minimum standards, recommendations and guidelines for reporting Exploration Results, Mineral Resources and Ore Reserves.
The VALMIN Code was the first of its type and its success has spawned the development of similar codes in other countries: SAMVAL in South Africa, CIMVal in Canada and more recently IMVAL – an international mineral valuation reporting standards template that aims to harmonise the language and concepts in the various mineral valuation codes.
The history of the VALMIN Code follows a similar path to that of the JORC Code. The JORC Committee was first established in 1971 as an industry response to shortcomings in the promotion of mineral resources and reserves in public markets. Rather than have regulators impose new laws on industry, a code was proposed so that the industry could manage itself.
The VALMIN Code can trace its origins to 1981 when the Sydney Stock Exchange sought assistance regarding resource/mineral asset valuations. This led to a series of recommendations being published in the AusIMM Bulletin in 1983, later titled The Valuation of Mining and Petroleum Properties and Companies.
The VALMIN Code not only helps resource professionals and corporations to comply with the law. It also provides a framework that allows investors in the minerals industry to compare the values of very different classes of assets, of varying project size and maturity, in very different geological and national governance settings.