I. Mining Enterprise the specificity—starting from Enterprise Understood from a valuation perspective

　　Compared with typical manufacturing and processing enterprises, mining enterprises have unique characteristics in their production and operations. These unique characteristics pose challenges when using conventional valuation methods to assess the value of mining enterprises.

　　(1) Minerals, as objects of productive labor, are scarce and non-renewable, which limits the lifespan of mines.

　　Raw materials required by general industrial enterprises Materials These needs can be met through external procurement, and through technological upgrades and the development of new products, enterprises can maintain their vitality indefinitely. The mineral resources utilized in mining operations are non-renewable and exhaustible. The lifespan of a mine depends on the reserves of mineral resources within its mining area: the greater the reserves, the longer the mine’s service life; the smaller the reserves, the shorter the service life. However, regardless of the amount of resources available, mining enterprises will eventually cease operations and close their mines once the recoverable reserves are exhausted.

　　In the valuation of typical enterprises, when using the discounted cash flow method, it is generally assumed that the enterprise will continue to operate sustainably. Consequently, in valuation practice, it is assumed that the enterprise will enter a period of stable earnings in the future, and its value for this stable future period is estimated using the present value of a perpetuity. However, mining enterprises have finite mine lives and thus do not meet the assumption of going concern. As a result, their earnings periods are typically determined based on the lifespan of their mines. Therefore, valuing mining enterprises using the income approach differs from valuing general enterprises.

　　(2) The mining industry is highly risky, making it difficult to select an appropriate discount rate.

　　Mineral resources are buried underground, and even with detailed exploration, it remains impossible to fully understand their quality and scale. The process of locating, exploring, and ultimately developing and utilizing mineral resources is a continuous journey of exploration into the unknown. Mining exploration is fraught with great difficulty, high costs, and numerous risks in both exploration and development—factors that simply cannot be matched by most industrial enterprises.

　　When conducting value assessments of mining enterprises, it is challenging to account for the impact of their high risk on enterprise value—particularly when using the income approach. Specifically, selecting an appropriate discount rate that accurately reflects the high-risk profile of mining enterprises poses significant difficulties.

　　(3) The mining industry is characterized by cyclicality, and prices of mineral products fluctuate considerably.

　　The mining industry is a relatively typical cyclical sector. The development cycle of the mining industry is associated with... Economy The development cycle is generally consistent, typically spanning ten years per cycle. Prices of base metals and the mining industry... Company The volatility of market value (stock price) is greater than the volatility of industrial added value. Taking the Chinese stock market as an example, 2005 — 2007 The stock prices of non-ferrous metals rose this year. 32 By a factor of two, while the stock market only rose. 5 Twice. 2008 The stock market fell this year, and colored metal stocks plummeted to almost nothing. 1/6 , while the stock market still has... 1/3 It’s twice as much. During the same period, global prices for non-ferrous metals rose. 2 ~ 10 Twice.

　　The lifespan of large-scale mines far exceeds... 10 The mining cycle of a year generally spans... 3 ~ 6 During a mining cycle, prices of mineral products will experience significant fluctuations. Therefore, when evaluating the value of mining enterprises, the impact of the mining cycle should be taken into account. However, in valuation practice, the income approach typically assumes that future product prices will remain constant when valuing ordinary enterprises—a premise that is inconsistent with the cyclical nature of the mining industry.

　　(4) Mining enterprises Architecture The value of things has particularity.

　　Mining enterprise Architecture The assets include above-ground buildings and mine buildings.

　　1. Value of ground-level buildings

　　Most mines Geography Remote location, local Economy Relying on the mining industry: Once mineral resources are exhausted, the value of land-use rights and above-ground structures owned by mining enterprises will drop to the level typical of ordinary mountainous regions, resulting in a substantial decline in value. Although many of these above-ground structures can still function normally even after mine closure.

　　In actual practice, it is essential to fully integrate the mine’s lifespan and local economic conditions when determining the value of surface structures owned by mining enterprises. If there are other economic entities developing near the mine, the value of surface structures generally tends to be higher.

　　2. Value of mine buildings

　　In mining production, it is essential to excavate and construct a large number of structures, such as shafts for underground mining and bottom-level yard facilities. Transportation Large-scale underground roadway and tunneling projects, such as the main shaft.

　　Due to the specialized nature of mine buildings’ intended use, their immovability, and their specific service life, their value depends both on... History Cost is also closely related to the extraction of mineral resources around the tunnels.

　　For instance, a main roadway serving a particular mining stage will lose all its value once the resources in that stage have been fully extracted; whereas the primary development roadways serving the entire mine will retain their value throughout the mine’s entire production life. On the other hand, some production and exploration roadways, once established, will no longer hold any value because subsequent exploration has revealed that no mineral deposits are present at their locations for extraction.

　　It is evident that mine buildings differ from ordinary fixed assets of general enterprises in that their value transfer mechanism is distinctly different from that of typical fixed assets. The change in their value does not hinge on the amount of depreciation charged, but rather on the quantity of recoverable reserves within their service life or the length of the mining period.

　　In addition, our country Accounting The system does not provide for “depreciation” of assets such as shafts, tunnels, and mine buildings; instead, it allocates a “maintenance and repair fee.”

　　There are differences between the changes in value of buildings owned by mining enterprises and those owned by general enterprises. Consequently, when using the cost approach to assess their value, determining the amount of depreciation poses significant challenges.

　　(5) The assessed value of mineral rights assets may exceed the overall assessed value of the mining enterprise.

　　Currently, many appraisers are puzzled as to why the appraised value of mining rights assets held by mining enterprises often exceeds the overall appraised value of the mining enterprises themselves. The reason lies in the fact that, in practice under the income approach, the future cash flows used for valuing both the mining enterprise and its mining rights assets are identical; however, the discount rates applied differ. According to current guidelines for mining rights valuation, the valuation of mining rights payments is generally... 8% ~ 10% selected from among them; and when valuing mining enterprises, given the high risk inherent in mining, generally... 10% The above selection generally has higher values than the former.

　　Therefore, when using the asset-based approach and the income approach to value a mining enterprise, the results obtained from these two valuation methods will differ significantly.

　　II. Principles for Selecting Multiplier Valuation Metrics

　　In the process of valuing a company using the market approach, the multiple valuation method primarily relies on the entity being valued... Company is evaluated by multiplying a certain variable by a valuation multiplier. Selecting an appropriate valuation multiplier is... Application The key to the multiplier valuation method is that the valuation multiplier can be based on either the balance sheet or the income statement, or even other variables related to the company’s operations. In fact, Kamstra ( 2001 The research findings demonstrate that corporate valuation can be based on a stable, long-term relationship between any relevant variable and the firm’s value. Therefore, in addition to traditional valuation variables such as earnings per share and net assets per share, other variables—including sales revenue, total assets, and even metrics like webpage click-through rates for internet companies or customer numbers for telecom companies—can all be used to assess the fundamentals of the company being valued. In other words, as long as a valuation variable maintains a relatively stable, long-term relationship with the company’s value, it can serve as an alternative candidate for use as a valuation multiplier. Kamstra ( 2001 The research findings provide theoretical guiding principles for selecting valuation multiplier metrics. 　　Research indicates that specific multipliers are appropriate for valuing certain types of businesses: for industrial enterprises, the price-to-earnings ratio should be used; for real estate companies and the hotel industry, the price-to-cash-flow ratio should be employed; for... Finance Enterprises, such as Bank and Insurance Companies should use the price-to-book ratio. So, for mining companies, what multiple would be most appropriate?

　　For mining enterprises, the quantity and quality of mineral resources are the foundation upon which the company’s profitability, development, and growth depend. The interaction between the company’s ore reserve statement and its balance sheet forms the basis for everything else.

　　Unlike the valuation methods used for downstream manufacturing enterprises, the valuation of resource-extraction companies has its own unique characteristics. Due to the inherent features of resource-based enterprises, in selecting economic indicators, generally price is the primary factor. / Revenue ( P/E )、Price / Net assets ( P/B ) The indicator is not suitable for inferring the value of the target mining company.

　　3. Develop a multiplier valuation metric tailored to the mining industry, meeting the needs of value assessment for mining enterprises.

　　Using the enterprise value—reflected by the quantity and value of mineral resources controlled by the enterprise—as the basis for comparative analysis, we adopt the enterprise value. / Resource volume, enterprise value / We compare indicators such as the value of recoverable reserves, as these indicators more intuitively reflect the market’s assessment of the mineral resources themselves, thereby directly influencing the valuation of mining enterprises. In this paper, we have developed a new set of mining-specific multiplier valuation indicators to assess the value of mining enterprises.