Research On The Main Parameter Selection Of Discounted Cash Flow In The Mining Right Assessment

In west market economy country, Exploration and Mining Right is used far andwide. The evaluation method quite is mature. In our country, Exploration and MiningRight is attracting eyes more and more in the recent years. Legal laws and regulationsrelatively gradually have also established and be consummating. Its technical natureand the feasibility, however, has many problems. Since many years, we always caredabout the development of fundamental research of Exploration and Mining Right inthe world, and takes evaluation of Exploration and Mining Ringht research as ourimportant research topic. The method of Discounted Cash Flows (DCF) is extremelywidespread applied in progress of evaluation of Exploration and Mining Right. Thisarticle will systematically introduc the principle of DCF. In the appraisal, theparameter selection is extremely important. Reserves, the development investmentincome and the discounting rate play the decisive role to evaluation result. The casethat appraisal reserves all are resource quantity ((331), (332) (334), and so on)appeared when we evaluate the exploration and mining right of some mine company,such as Chaochuan mine and 12 mine of Pingdingshan Coal Co., Qinglong coal mineⅡ well of Yunnan province, Jiafa coal mine of Fuyuan, Yunnan province, Hongshuncoal mine of Yunnan province, Youzeng iron mine of Chicheng, Hebei, and soon.According to the present evaluation guide, reserves quantity need adjusted by theconfidence level coefficient before participate in the appraisal computation. Thisarticle carries on analysis showing how to take its confidence level coefficient value,profits from different rank reserves confidence level estimate sector which AustralianLawrence proposed. The definite confidence level coefficient should carries on theadjustment according to the geology exploration degree and the feasibility studyresult. If the geology exploration degree is high, then it is economic and needn'tadjust, if the geology exploration dregree is low, then deal it according to the specialdetails to carry on the appropriate readjustment.The most obvious difference in DCFmethod in evaluation of Exploration and Mining Right used between Our country andoverseas lies on the investment return rate being deducted in our country. Accordingas our arithmetic, it is reasonable to reckon investment income in discount rate tomake sure how much the company will be reward. At present, discount rate isconstant, 7%, for any mine in assessment affair. Every mine company has differentmine, therefore they face different risk. So uniform discount rate is not suitable. Takethe present estimate theory as the foundation,we propose the method, "the riskadjustment return rate law". We suggest that commutation rate is composed bynonrisk return rate and risk return rate. Nonrisk return rate will be come up to thelong-term treasury bill rate (compound interest). Risk return rate will be determinedthrough the model capital asset fixed price to measure the risk. We focus on separatedegree of the property price and the company own management condition. Thesecomparably data are form companies coming into the market.