In mining, valuation is the process of determining the fair market value of a mining property.
Finding fair market value in valuing a mining project or mining property requires an analysis of the estimated size and grade of the deposit in question, and the complexity and costs of extracting it.
Given the degree of geological uncertainty around reserves and resources, determining how much metal is actually in the soil and the value of mining assets is a challenging process.
In terms of their impact on value, certain factors are always the most important: Costs and revenues are directly related to the grade of the mine, as production costs are determined by the quantity of tons of ore mined and processed, and revenues are determined by the number of pounds or ounces of metal produced.
Generally, however, profit is more sensitive to changes in revenue than changes in cost, so rating and income are the cash flow factors that most influence valuation.