The comparative way is based on the idea that the lot’s price can be defined by the analysis of the transactions with the lots that have the same characteristics. This method includes following operations: observing the transactions with the objects similar to the current one; revealing the links between prices and characteristics; calculating the most appropriate price that can be paid for the lot which is being evaluated. The evaluators’ poll, organized by Canadian Institute of Mining and Metallurgy, revealed that the comparative method is one of the most popular ways of practical evaluation. This approach has many advantages, such as: clean logic and convincing results in case of having enough data on similar transactions; easy check of initial data; low labor-intensiveness. The basic disadvantage of the comparative approach is that it can be used in terms of having all necessary information about similar lots that has been transacted in the same commercial conditions only.
The Market Approach (Sales Comparison Approach) in mineral property valuation can boast easy-to-understand logic and yield reliable results. It can provide a reliable indication of a property's market value only if sufficient and representative data on arm’s lengths transactions with mineral properties that have similar characteristics are available. Official publications covering state bids are an essential source of this data. It is important to make sure that the bid be competitive and double-checked for compliance with the arm’s lengths criterion. Price per unit of reserves/resources is the most popular unit of comparison in mineral property valuation. Elements of comparison usually include physical and chemical properties, mineral quantity, applicable extraction and processing methods, geographic location with respect to availability of infrastructure and market for the product. To make models and calculate reliable adjustments, the data on similar mineral properties should be comparable and the elements of comparison selected on a uniform basis. It needs to collect some additional data on comparable mineral transactions.
