Net Present Value & Net Asset Value

NPV and NAV

As described in the Methodology section, if sufficient information is provided by the gold company, it may be possible to make estimates of Net Present Value. This cannot be done on a simple basis (unless it is a one-mine company) and it will usually involve a mine-by-mine analysis for each mine or project within a specific company. For each mine and development project it is necessary to collate as accurately as possible the expected production profiles, capital and operating costs and to schedule these on an annual basis. It is then necessary to make assumptions on expected gold prices and discount rates. All operations of a company need to be aggregated and combined with the corporate balance sheet to derive Net Asset Value Estimates for the entire company. It is usual to undertake such estimates under a range of discount rates and gold prices.
 
Such estimates can then be compared with the current market value of the gold company concerned. This may show that the NAV estimates represent a Discount or Premium to the actual Market Value. Ideally, such assessments need to be undertaken for a broad range of companies with different domiciles, size, primary listings and areas of operations as this may show that NAV Premiums or Discounts vary in circumstances. Historically the North American gold producers have traded at a Premium to Net Asset Value.

Providing Net Asset Value estimates is currently beyond the scope of this web site but GoldVal.com is able to undertake such valuations – see Services section.