Valuation, depreciation and the rate base

Bibliographic data

Monograph

Identifikator:: 174667931X

URN:: urn:nbn:de:zbw-retromon-119897

Document type:: Monograph

Author:: Grunsky, Carl Ewald http://d-nb.info/gnd/10180959X

Title:: Valuation, depreciation and the rate base

Edition:: 2. ed., revised and extended

Place of publication:: New York

Publisher:: Wiley

Year of publication:: 1927

Scope:: X, 500 Seiten

Digitisation:: 2021

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter XIII. The valuation of mines and oil properties

Collection:: Economics Books

THE VALUATION OF MINES AND OIL PROPERTIES 245 “basic ” price represents the point at which the mineral produc- tion falls off to such an extent that a rise in price results. Mr. Hoover in his “ Principles of Mining ” states that safety lies somewhere between the “basic” and “ normal” prices. No such limitation should be placed on the exercise of the judgment of the valuating engineer, as this assumption cannot hold good during the years following protracted periods of finan- cial depression such as the hard times of 1893 to 1898. The “normal ” price of many minerals estimated on a 10-year or 20- year average basis was for a considerable period of time following this depression less than the actual value of the mineral. For illustrative purposes certain tables of statistics giving the production and average prices of four important metals (copper, lead, silver and zinc) from 1880 to 1914 are given at the close of this Chapter. Curves have been plotted which illustrate the relative increase in the production of these metals from year to year and also the changes in the average annual price. (Fig. 4 to Fig. 7.) For comparison normal curves of production and price (based on ten-year averages) have been plotted assuming that the average figure for production and price are applicable midway of the ten-year period. By continuing these normal curves to date on the assumption of a five-year future history for the metal, a present “ normal ” price can be obtained that will be as close an approximation as can be made. Valuations for Purchase and Sale. — When a valuation of a mining property is needed because of a contemplated change in ownership, the most satisfactory method of valuation is the straightforward one involving the determination of the value of the ore body on the basis of its production past, present and expected. Such a valuation includes an estimate of the probable life or expectancy of the property under the actual or an assumed rate of production, an estimate of the price that the mineral product will bring in the markets of the world and an estimate of the cost of producing the mineral. This method requires the use of all available information as to geology, actual operating costs,

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