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Book Review: The Mining Valuation Handbook (1st Edition) |
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Book Review: The Mining Valuation Handbook (1st Edition) Review by eddievanhalen (TNO member since August 2002)
As I understand it, this title is widely regarded as the best available text on the Australian resources industry for both investors and company management. I can't say I've come across too many investment books dedicated wholly to the resources industry anyway, so perhaps this isn't a great recommendation in itself. However, I can say that it does live up to its reputation in terms of being a comprehensive study of the subject and a valuable reference for analysing resource companies. |  |
The emphasis placed on the term "reference" in the last sentence is a good indication of what to expect from this book in terms of its style, tone and structure. It is not entertaining reading, there're no jokes or lighthearted moments - just 250 pages or so of hard facts and figures on the Autralian resources industry. This makes for some very hard reading, something akin to working through a medium-sized university textbook from cover to cover. In fact I can't see anyone except the most dedicated resources buff even attemping to read it from cover to cover without skipping the odd page or chapter!
The topics covered in The Mining Valuation Handbook that will be of most interest to the budding resources analyst include the following:
the process involved in getting a mining project off the ground (eg. pre-feasablility and bankable feasability studies); detail on how each major commodity is mined and processed; the pros and cons of the various drilling/mining techniques; the classification of reserves and resources; various project valuation methodologies, including the definition of terms commonly used in research reports such as NPV and IRR; sensitivity analysis; how cut-off grade theory is applied; and, the life cycle of a resources company and how you may expect the share price to respond during the various stages.
All of the above topics are covered with a good degree of technical detail. However when the author ventures into the area of NPV/IRR calculations and the mathematcis involved, I felt that parts of the material were presented in a fashion that will most likely confuse many readers. Those that have previous experience with discounted cashflow techniques will fare a bit better than most and a misprint at a critical point in one example doesn't help either! | 
The Mining Valuation Handbook
2ND EDITION IS OUT!by Dr Victor Rudenno Normal Price: A$89.95Member Price: A$74.95
ISBN: 0731400755 
To receive TNO Member's discount, enter your membership no. and the discounted price quoted here into the comments box during checkout.
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Overall I give the book high marks for being quite a comprehensive reference. It is worth noting that the 1st edition (on which this book review is based) was published in 1998 and it is therefore inevitable that many of the figures and statistics used in the text are well and truly out of date. It is also quite possible that subsequent technological advances in some areas may also have dated some of the technical detail slightly.
In terms of those who are most likely to benefit from reading The Mining Valuation Handbook, it should be made quite clear that this is not a book that is suitable for absolute beginners. A good working knowledge of the nuts and bolts of the resources industry, the stockmarket and valuation techniques would be beneficial, as would a good "head" for figures.
| Reviewer's Rating | | Contents | "High marks for being quite a comprehensive reference." | | Writing Style | "I have marked the book down on writing style as a guide to how enjoyable it is to read, however the style is very appropriate for a text/reference book." | | Recommended Level | Intermediate to Advanced | Book Excerpt
 (available to TNO Paid Members only) |
| Table of Contents | 1. Introduction
2. Australian Resources Industry
3. A Quick Guide to Financials
4. Feasibility Studies
5. Relative Commodity Values
6. Resource Project Considerations
7. Classification of Resources and Reserves
8. Mining and Hydrocarbon Recovery
9. Indicative Capital and Operating Costs
10. Hedging Commodities and Exchange Rates
11. Taxation, Depreciation and Exploration Standards
12. Valuation and Pricing Techniques
13. Quantifying Risks
14. Cut-Off Grade Theory and Practice
15. Commodity Price Forecasting
16. Share Price Performance
17. Impact of Exploration Results
18. Determining The Appropriate Discount Rate
19. Dealing With Inflation
20. Government Royalties
21. Agricola Mining - Case Study
22. Commodity Profiles
23. Sources of Public Information
24. Abbreviations, Conversions and Energy Factors
25. Bibliography and References
26. Glossary of Terms
About the Author
Dr. Victor Rudenno holds a Bachelor of Mining Engineering degree, a Master of Commerce degree and a PhD for his thesis in Mining Economics. During his academic career, he lectured at the University of New South Wales, and the University of Sydney predominantly on mining economics, geostatistics, operations research and minerals processing. In 1984, he moved to the stockbroking industry as a mining analyst. He was voted by his peers as one of the Top Three energy analysts in Australia in the BRW 1994 Analyst Survey. In 1995, he moved to the corporate side of investment banking. He is a Fellow of the Securities Institute of Australia and a Member of the Australian Institute of Mining and Metallurgy. He is also a principal lecturer at the SIA.
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