170‑10 The valuation principles170‑10 The valuation principles

#### 170‑10 The valuation principles Basic principle (1) A valuation relating to a mining project interest or \*pre‑mining project interest is to be reasonable having regard to the objects of the \*MRRT law. Sub‑principles (2) A valuation that is to be made as at a particular time may take into account: (a) things that have actually happened before that time; and (b) things that, as at that time, are reasonably expected to happen after that time. > Note: Example: A valuation of the rights and interests that constitute a mining project interest as at a particular time may take account of a reasonable estimate, as at that time, of the coal price at a future time. The actual coal price at that future time is not taken into account. (3) The sum of the values of all things in a set must equal the value of the set. > Note: Example: A mining operation is valued as at 1 May 2010 at $6 billion. Downstream assets (such as crushers and transport infrastructure) are valued at $2 billion. Upstream capital equipment is valued at $1 billion. The value of all other assets in the operation, including mining rights, must be $3 billion. (4) Identical things in identical circumstances have the same value. (5) An assumption or estimate relating to a mining project interest or \*pre‑mining project interest: (a) is to be reasonable when considered in isolation; and (b) is to be reasonable when considered together with all other assumptions or estimates made in relation to the interest; and (c) is to be made consistently for all things relating to the interest. > Note: Example 1: An estimate of a commodity price at a future time must itself be reasonable, and must also be reasonable when considered together with all other assumptions or estimates about things that may affect the commodity price (such as a currency exchange rate). > Note: Example 2: If the value of a mine is worked out on the assumption that mine production will rise to a particular extent over time, the valuation of each asset within the project must use a consistent assumption. (6) A valuation relating to a mining project interest or \*pre‑mining project interest is to be reconcilable with each other valuation made relating to the interest (including, if relevant, a valuation relating to a pre‑mining project interest from which a mining project interest \*originates), if that other valuation: (a) was made after 1 May 2010; and (b) was made for the purposes of working out an amount under the \*MRRT law; and (c) is, if it is a valuation of a thing of which there is more than one valuation meeting the requirements in paragraphs (a) and (b), the most recent such valuation. Priority of basic principle (7) To the extent the application of a sub‑principle in subsections (2) to (6) to a particular valuation would conflict with the basic principle in subsection (1), the basic principle is to be applied and the sub‑principle disregarded.