Ounces into pounds—how much is an in situ ounce of platinum worth?

One of the valuation approaches applied to Advanced Exploration Areas and Pre-Development Projects is the so-called ‘in situ Mineralization Method’ or the ‘Yardstick Method’. This method is based on the concept of a known undeveloped Mineral Resource being worth a certain fraction (the ‘Yardstick’) of the contained commodity value (‘metal in ground’), using commodity prices ruling at the date of valuation. The Yardstick value is derived usually from an average market-based figure obtained from an analysis of recent transactions and is expressed as a monetary value per ounce or per tonne. It may be modified to accommodate the quality (e.g. grade) and category (e.g. confidence level) of the Mineral Resource/Reserve involved and the time, effort and expenditure expected to be involved in bringing the project to fruition. Some eighteen recent and relevant transactions were analysed, allowing the following general conclusions to be reached: • a Yardstick with which to value undeveloped PGE mineral resources is likely to range between 0.5% and 2.5% of the in-ground contained metal value • the expected method of mining (especially with regard to mining costs) and the grade of the mineralization both have a strong influence on the Yardstick • the status (classification) of the Mineral Resource has some influence on the Yardstick and • the ruling price of platinum and the regional location of the deposit appear to have insignificant influences on the Yardstick.