Fantomas: in the words of the disembodied voice in Twelve Monkeys, "science ain't an exact science." As for my analyst friend, he's a retired professional.

That's right, you don't know the price of zinc in 2013. Therefore, if you're investing in a 2013 zinc mine, you're taking on risk. Now you have to quantify that risk. Apparently people do that, there's even supposedly an accounting method for that, but it's way beyond my ken as of now. (My gut feeling is the risk should be related to the delta in price between today's spot and the future contract for the date in question - because futures are the market's most efficientish way of controlling future commodity price risk.)

And basically, we can slice and dice the individual risks and apply a number to each one, but that's getting too deep into the details. So it's better to look at the overall risk and say "mine in Quebec? 8%. Mine in Bolivia? 15%. Mine in Sierra Leone? Eesh, 20%."

I only highlighted individual risks (political, commodity, inflation etc) to show that there are several different risks, none of which can be entirely ignored. Yes, even Quebec has a political risk - if you want proof, look at the Australian miners facing new taxes.

As for dividing the future asset value by the future share float - that's just how you do it, period. It's inexact, but at least it avoids making a 50%-400% error in target price.