Post on 01-Apr-2015
Dr. Herman Tso, Chief Geologist
Mining Company & Project Valuation
HASS Natural Resources Limited HASS group Inc
Address: Unit A, 7/F, Pico Tower, 66 Gloucester Rd., Wanchai , Hong Kong
Website: http://www.hass-group.com
Business & Intangible Assets ValuationBusiness & Intangible Assets ValuationNatural Resources ValuationNatural Resources ValuationPurchase Price AllocationPurchase Price AllocationFinancial Instruments ValuationFinancial Instruments ValuationIndustrial ValuationIndustrial ValuationCorporate AdvisoryCorporate Advisory
• Project Feasibility StudyProject Feasibility Study• Resources EstimationResources Estimation• EvaluationEvaluation• Due DiligentDue Diligent• Project FundingProject Funding• Technical ReportTechnical Report
CONNECTING YOUR BUSINESS TO THE RESOURCES YOU NEED
ArgentinaAustralia
BrazilChina
IndonesiaKazakhstan
MalaysiaMongolia
PhilippinesRussia
South AfricaUSA
CoalCopperGoldNickelLeadZinc
•Molybdenum
•Iron
•Manganese
•Oilfield
•Salt Lake
•Silver
•Tin
Petroleum Resources
Classification System
Illustrations of Resources
Project Experience
Classification and Differences Between Mineral Resources and Reserves
Resources• Inferred• Indicated• Measured
Reserves• Possible• Probable• Proved
Differences Between Mineral Resources and Reserves (con’t)
Project Experience
Technical ReportTechnical Report
• Prepared by Competent Person
- Minimum of 5 years of experience
- Professionally qualified
- Take overall responsibility
- Independent of the issuer
Reporting Standards for Technical ReportReporting Standards for Technical Report
• Mineral Resources
1. Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (“JORC CodeJORC Code”) ;
2. National Instrument 43-101 (“NI 43-101NI 43-101”); or
3. South African Code for Reporting of Mineral Resources and Mineral Reserves (“SAMREC CodeSAMREC Code”)
• Petroleum Resources
1. Petroleum Resources Management System (“PRMSPRMS”)
Project Experience
JORC Code (Mineral Resources)JORC Code (Mineral Resources)
• Originally issued by the Australasian Jointed Ore Reserves Committee in 1989
• Purposes:– Establish the Minimum Standards for Public
Reporting of Mineral Resources and Ore Reserve– Set out a System for the Classification of Tonnage
and Grade Estimates– Specify the Qualification and Experience required for
Competent Person
Project Experience
NI 43-101 (Mineral Resources)NI 43-101 (Mineral Resources)
• A mineral resource classification scheme used for the information disclosure relating in Canada
• Purposes:– Ensure that misleading, erroneous or fraudulent
information is not published– Stipulate prescribed disclosure within the national
instrument (such as technical information, terminology, compliant report)
• Comparison to JORC Code– Require substantially more technical disclosure
Project Experience
SAMREC Code (Mineral Resources)SAMREC Code (Mineral Resources)
• A required minimum standard for public reporting on exploration results mineral resources or mineral reserves in South Africa
• Purposes:– Inform investors or potential investors and their advisers – Satisfy regulatory requirements
Project Experience
PRMS (Petroleum Reserves)PRMS (Petroleum Reserves)
• Approved by the Society of Petroleum Engineers (SPE) Board of Directors
• Purposes:– Provide a consistent approach to estimating
petroleum quantities– Evaluate development projects – Present results within a comprehensive
classification framework
Project Experience
Russian Code & Chinese Code Conversion Guidelines
Russian Resource/Reserve Reporting Standard
• Level of Knowledge– P3: Regional Reconnaissance– P2: Target Identification– P1: Initial Trenching and Drilling– C2: Scoping / Pre-feasibility– C1: Feasibility Study– B: Blocking out Ore Panels– A: Production
Project Experience
Russian Code to JORC Code Conversion Guidelines
Project Experience
Definition of the New Chinese Resource Category Scheme
Chinese Code to JORC Code Conversion Guidelines
Project Experience
Part 1 Chapter 18Part 1 Chapter 181.11.1 Introduction to the Mining IndustryIntroduction to the Mining Industry1.21.2 Key Changes and New Requirements Key Changes and New Requirements
of HKEx Listing Rule on Mineral of HKEx Listing Rule on Mineral Companies - Chapter 18/18ACompanies - Chapter 18/18A
1.31.3 Important IssuesImportant Issues- Listing Requirements- Listing Requirements- Disclosure Requirements- Disclosure Requirements- Preparation of Reports- Preparation of Reports
1.41.4 Recent Technical Advisory and Recent Technical Advisory and Valuation Projects of ROMAValuation Projects of ROMA
AGENDA
Part 2 ValuationPart 2 Valuation
2.12.1 Reporting Standards for ValuationReporting Standards for Valuation
2.22.2 Determination of the Value of Determination of the Value of Mineral/Petroleum AssetsMineral/Petroleum Assets
Project Experience
Part 1- Chapter 18
• Mining Industies - Definte Life - Limited resouces• Other Industries - Going comcern - Terminal value(DCF)
Key Changes and New Requirements of Chapter 18/18A
• Purpose of Rule Change:– Increase shareholders
and investors’ confidence in junior mining companies listed in the HKEx
Project Experience
Chapter 18/18A
• New Rules - Effective on 3 June 2010
1. Exclude early stage exploration companies from listing
2. Industry experience requirement of Competent Person has been increased from 3 to 5 years
3. Disclose specific risks and general risks
Chapter 18/18A (con’t)
4. Allow mineral and exploration companies to list without needing the financial track record of Listing Rule 8.05
5. Mineral resources and mineral reserves must be reported separately
Project Experience
Chapter 18/18A (con’t)
Allow companies to list only if they have a minimum of the following resources:
Petroleum Companies - At Least a meaningful portfolio of Contingent Resources
Minernal Companies - At least meaniful portfolio of Indicated Resource
Project Experience
• All Mineral Companies
- Companies that only have Inferred or Prospective Resources will not be eligible for an IPO listing under the new Chapter 18 rule
- Demonstrate working capital for 125% of budgeted needs for at least the next 12 months ( 13 months)
Disclosure Requirements
• Interim and Annual Reports have to include:
Details of its exploration, development and mining production activities
A summary of expenditure incurred on these activities during the period under review
Listing Requirements
Project Experience
Preparation of Reports
Important Issues – Preparation of
Reports
Project Experience
Important Issues• Early Stage Exploration Companies
– Must outline their plans to proceed to production, supported by an independent Scoping Study
– Mineral companies which do not satisfy Rule 8.05(1) (Profit Test), but are applying to list under Listing Rule 18.04 must demonstrate a clear path to commercial production
– Pre-feasibility studies are required
• All Mineral Companies
- Must demonstrate that they have adequate rights to participate actively in the exploration or exploration and extraction of resources, either by:
Having controlling interests in a majority (by value) of the assets in which they have invested; or
Through other rights, which give them significant
influence in decisions over the extraction of those resources
Project Experience
Insights from Our Recent Project Experiences
In order to smoothen the listing and transaction transaction process, we suggest:•Make sure that both the technical and valuation reports are prepared in accordance with the reporting standards accepted by the HKEx•Have sufficient due diligence conducted•Show that you have conducted sufficient researches on the involved market and mineral resources•Have sufficient disclosure of information required by the HKEx in the circular (Do not try to hide anything)
Project Experience
1. CIMVAL
- Set out in Canada
- Outline the sections to be included in the Valuation Report
2. SAMVAL
- Set out in South Africa
- Relatively less restrictive compared to the VALMIN Code and the CIMVAL Code
- Necessary to carry out a site visit by a Competent Valuator or by a Competent Person or an expert
Project Experience
Technical
Stock Code Report Nature Mine Type Remarks
Internal Reference Purpose
Issued Report Date &
Purpose
March-11 Yorkshire Capital Limited -
Technical Due
Diligence Report
Petroleum ROMA
March-11 EPI (Holdings) Limited 689Resources Estimation
ReportPetroleum ROMA
March-11 Bao Yuan Holdings Limited 692Resources
Review Report
Iron & Titanium dioxide
ROMA
Recent Technical Advisory – Natural Resources Industry
Technical
Stock Code Report Nature Mine Type Remarks
Public Documentation
Purpose
Issued Report Date & Purpose
March-10Bao Yuan Holdings Limited (formerly
known as Ching Hing (Holdings) Limited)
692 Technical ReportIron &
Titanium dioxide
BMI Technical Consulting
April-10 Solartech International Holdings Limited 1166 Technical Report
Copper, Gold & Silver
BMI Technical Consulting
May-10Mongolia Investment Group Limited
(formerly known as Ming Hing Waterworks Holdings Limited)
402 Technical Report Coal BMI Technical Consulting
August-10 China Properties Investment Holdings Limited 736
Competent Person’s Report, Feasibility
Study
Copper & Molybden
umROMA
June-11 eForce Holdings Limited 943Competent Person’s
Report, Feasibility Study
Coal ROMA
Valuation
Stock Code Report Nature Mine Type Remarks
Public Documentation
Purpose
Issued Report Date &
Purpose
July-10 China Precious Metal Resources Holdings Co., Ltd. 1194 Natural Resources
ValuationGold & Nickel ROMA
August-10 China Properties Investment Holdings Limited 736 Natural Resources
Valuation
Copper & Molybden
umROMA
October-10 China Precious Metal Resources Holdings Co., Ltd. 1194 Natural Resources
Valuation Gold ROMA
November-10 Honbridge Holdings Limited 8137 Natural Resources Valuation Iron ROMA
February-11 King Stone Energy Group Limited 663 Natural Resources Valuation Coal ROMA
June-11 eForce Holdings Limited 943 Natural Resources Valuation Coal ROMA
June-11 China Precious Metal Resources Holdings Co., Ltd. 1194 Natural Resources
Valuation Gold ROMA
Valuation
Stock Code Report Nature Mine Type Remarks
Accounting Reference Purpose
Issued Report Date & Purpose
October-10 G-Resources Group Limited 1051 Intangible Assets Valuation
Gold & Silver
Greater China (Roma as
Consultant)
January-11 Ming Fung Jewellery Group Limited 860 Intangible Assets Valuation Gold ROMA
January-11 Ming Fung Jewellery Group Limited 860 Intangible Assets Valuation Gold ROMA
March-11 China Mining Resources Group Limited 340Intangible
Assets/Business Valuation
Molybdenum
Greater China (Roma as
Consultant)
March-11 North Mining Shares Co. Ltd. 433 Intangible Assets Valuation Gold & Iron
Ascent Partners (Roma as
Consultant)
March-11 North Mining Shares Co. Ltd. 433 Intangible Assets Valuation
Molybdenum
Ascent Partners (Roma as
Consultant)
March-11 North Mining Shares Co. Ltd. 433 Intangible Assets Valuation Iron
Ascent Partners (Roma as
Consultant)
March-11 North Mining Shares Co. Ltd. 433 Intangible Assets Valuation
Molybdenum
Ascent Partners (Roma as
Consultant)
March-11 China Precious Metal Resources Holdings Co., Ltd. 1194 Intangible Assets
ValuationGold & Nickel ROMA
March-11 China Precious Metal Resources Holdings Co., Ltd. 1194 Intangible Assets
Valuation Gold ROMA
March-11 China Precious Metal Resources Holdings Co., Ltd. 1194 Intangible Assets
Valuation Gold ROMA
March-11 China Precious Metal Resources Holdings Co., Ltd. 1194 Intangible Assets
Valuation Gold ROMA
March-11 China Precious Metal Resources Holdings Co., Ltd. 1194 Intangible Assets
Valuation Gold ROMA
June-11 G-Resources Group Limited 1051 Intangible Assets Valuation
Gold & Silver
Greater China (Roma as
Consultant)
Part 2 Part 2 ValuationValuation
Reporting Standards for Valuation
1. Standards and Guidelines for Valuation of Mineral Properties (“CIMVALCIMVAL” code);
2. South African Code for the Reporting of Mineral Asset Valuation (“SAMVALSAMVAL” code); or
3. Code for the Technical Assessment and Valuation Mineral and Petroleum Assets and Securities for Independent Expert Reports (“VALMINVALMIN” code)
Determination of the Value of Mineral/Petroleum Assets
Market-Based Approach
- Comparing prices of business entities in a similar nature
- e.g. Using price-to-sales ratio (P/S ratio)
- Estimate the price using information of similar transactions
Income-Based Approach
- Economic benefits due to the income producing capability
- Estimation of value depends on cost structure of companies
- Adopt discount cash flow (DCF) method
Cost-Based Approach- Aggregating the costs of developing the asset to its
current condition, or replacing that asset
Determination of the Value of Mineral/Petroleum Assets