Mine and Project Valuation at High Metals Prices

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Now, metals stocks are starting to increase, leaving miners and analysts with a dilemma: Where will metals prices go with a stock build? And, how do you value a mine or mining project with no consensus on medium term prices only on very long-term averages?

The last few years' increases in base metal prices have mainly been explained by other analysts in three ways: that a significant increase in Chinese consumption has brought stocks of metals down to critically low levels; that speculation in metals has affected prices; or that the markets have been artificially manipulated.

Bloomsbury Minerals Economics (BME) has another explanation.

In 2005, BME concluded that it was in fact long only investment (not to be confused with short-term speculative positions), and a resulting new dual purpose of metals (to fulfil industrial raw material needs and provide potential convertibility to cash for investors' rights to future metal) that changed the stock to price relationships and led to higher prices today. Now, metals stocks are starting to increase, leaving miners and analysts with a dilemma: Where will metals prices go with a stock build? And, how do you value a mine or mining project with no consensus on medium term prices only on very long-term averages?

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