http://www.basinvest.ch/upload/pdf/Valuation_of_Metals_and_Mining_Companies.pdf

Conclusion

All valuations of companies today differ from each other, not only because the companies are differently but also because different people with different knowledge and backgrounds do the valuations. Especially in valuing mining companies, it is immensely difficult to estimate production figures of the coming years since they are very uncertain.

The price forecasts of the underlying commodity, in this case copper, is also very difficult to predict and will differ even between professional analysts. Also other input’s forecasts, like discounted factor, costs and methodology used vary from analyst to analyst.

No valuation method can be said to be right, but no method is wrong either. The three methods: Multiples, Discounted Cash Flow and Real Options, should not be viewed as being independent of each other. The underlying idea is that they should complement the findings of each other.

The company valuation which is done in practical part of this paper is only one possible forecast for a company and hopefully gives a good indication of the future. Though, with in time it could be proven to be wrong. However, the theory behind the valuation and the basic models can be followed since it is only the estimations that will differ.

Final aspect is that, when some events in the world occur, such as impositions of a new 40% tax on resource in Australia, China’s destocking or the Greek/ EU debt crisis, valuation of mining companies seriously be distorted in the short-term