Miners Still Exaggerating Values

John Robertson


A constant theme at recent international mining industry investment conferences has been the unrealistic valuations being placed on projects by mining companies. The same is true at Mines and Money Asia currently underway in Hong Kong. Fund managers on one panel criticised use of discount rates for valuing projects as being far too low to properly reflect the risk characteristics of the industry. These comments imply that apparently low public market equity prices are closer to the mark than companies concede. This suggests significantly limited upside potential or even downside risk in some instances. It also explains why so few asset transactions are occurring and why companies are battling to source funding.

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John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...


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