The assumptions and limiting conditions described below are normally an integral part of every appraisal or valuation of a mineral property or mining business. Assumptions are necessary because appraisal is forward looking and must, of necessity, rely on certain assumptions about the future occurrence of events and/or conditions. Limiting conditions serve to notice the client and any intended and/or unintended readers of an appraisal report that the appraisal may have been performed under a set of defined conditions that would make it inappropriate to rely on it for other than its explicitly state purpose and use.

This statement of general assumptions and limiting conditions is in addition to individual assumptions and limiting conditions which may be contained in particular sections of this appraisal report and/or within the special appendix section that is attached to and made a part of this appraisal report. These general assumptions and limiting conditions include but are not limited to: (a) that title to the subject mineral property is assumed to be merchantable; (b) that no responsibility is assumed by this minerals appraiser for legal matters, including those affecting title to the subject mineral property; (c) that the legal description given for the subject mineral property is assumed to be correct; (d) that all opinions, estimates, and/or other data furnished to this minerals appraiser by others are assumed to be correct; (e) that adequate rights exist for access, ingress, egress and/or passage across and/or through the subject mineral property for the intended mining and processing operations; (f) that adequate water rights exist on and/or for the subject mineral property for the intended mining and processing operations; (g) that any mining leases are valid; (h) that other, more specific assumptions and/or limiting conditions regarding the geology, mineability, processability, marketability, general and specific economics mentioned in subsequent sections of this report are those which a knowledgeable prudent prospective purchaser of mineral properties would consider reasonable; (i) that this appraisal has been performed for a single specific purpose and relies on a particular definition of value and that the resulting estimated value may not be valid for any other purpose; (j) that the subject mineral property is assumed to be free from any and all environmental hazards, whether on the subject mineral property or on surrounding properties; (k) the income approach to value has relied on current year constant dollars and real discount rates; (l) the subject mineral property has been appraised as if held in fee simple ownership, assuming all mineral and surface rights, except federal leaseable minerals, are also held by the owner, affected only by typical encumbrances such as mortgages, easements, and zoning ordinances; (m) the subject mineral property has been appraised as if it is and will remain under responsible ownership and competent management; (n) the term ‘reasonable probability’ and similar wordings are not used in a strictly mathematical or statistical sense, but are only intended to mean that the expected occurrences of events and conditions considered in an appraisal are appropriate and consistent with the purpose and intended use of the appraisal, and; the information contained in the report should be comprehensible to those who have a reasonable understanding of mining business and economic activities and are willing to study the information with reasonable diligence.

Cautionary "Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995. Appraisal is not an exact science and reasonable persons may differ in arriving at an estimate of fair market value. With the exception of historical data, the data and analyses discussed in this appraisal are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from estimated values. Such forward-looking statements include but are not limited to statements involving levels of exploration and development expense, plant, machinery, and equipment expenses, estimated mine life, timing of production, and other schedules of development. Factors that could cause actual results to differ materially include but are not limited to decisions and activities of property owners and/or managers, unanticipated geological, metallurgical, mining, processing, grade, quality and/or other engineering problems, conclusions of feasibility studies and/or market analyses, changes in project parameters, the timing of receipt of regulatory permits, the failure of plant, equipment, machinery, or processes to operate in accordance with specifications or expectations, results of exploration/development activities, accidents, acts of nature, delays in start-up dates, environmental costs and risks, changes in mineral product prices, as well as other factors. Most of these factors are beyond the appraiser’s and owner’s ability to predict or control. Client and other users of this appraisal report are cautioned not to put undue reliance on forward looking statements. An appraisal report cannot be a substitute for a client and other users who rely on it to perform the proper level of due diligence required in the performance of their usual business.

Legal Compliance: Unless otherwise stated in the report, Client and/or mining operator currently meet and will continue to meet all current and future federal, state and local laws, ordinances, regulations and rules governing the type of activities currently being performed or contemplated to be performed on the subject property. These activities include, but are not limited to, exploration, development, production, processing, waste and tailings transportation and storage, reclamation, mining or other business activities, insurance, bonding, or any other activity conducted on or associated with the property being appraised.

Mining Claims: Unless otherwise stated in the report, the status of any unpatented mining claim (lode, placer, association placer, mill site or tunnel site) or any mining claim in the process of being patented, is as represented by Client and/or mining operator; mining claim validity is assumed; Consultant has not made an examination of federal, state or county records for any required filings.

Agreements: Unless otherwise stated in the report, any mineral rights, property leases, mineral production royalties and/or other payments, and/or mineral product sales contracts that are currently in effect and/or contemplated to be in effect are as represented by Client and/or mining operator.

Mineral Resources or Reserves: Unless otherwise stated in the report, mineral resources and reserves are as represented by Client and/or mining operator. Consultant will endeavor to review relevant documents to gain some insight that any stated resource or reserve is in substantial compliance with the intent of relevant federal, state or local laws, regulations or rules concerning resource or reserve reporting. An audit of resource or reserve quantities is not a part of a normal appraisal.

Production Plans and Mining and Processing Methods: Unless otherwise stated in the report, production plans and mining and processing methods and the expected rates of operation, plant capacity, availability and utilization and/or mineral product recoveries associated with these activities are as represented by Client and/or mining operator.

Fixed and Mobile Machinery and Equipment: Unless otherwise stated in the report, any fixed and/or mobile machinery and equipment is sufficient in quantity, size and suitability for intended use for the current and/or expected mineral production from the property being appraised.

Royalties, Working and Nonworking Interests: Unless otherwise stated in the report, the amounts, payment methods and schedules, divisions and/or apportionments, current and/or expected status of payments, accounting for and reporting of, or any other specified activities associated with these types of agreements are as represented by Client and/or mining operator.

Mineral Product Market, Administered and/or Contract Prices, Hedging Activities and/or Commodity Loans: Unless otherwise stated in the report, actual or expected prices, whether market, administered or contract prices, for mineral products being sold or contemplated to be sold from the property being appraised, any hedging and/or commodity loans that are or are expected to be associated with the property being appraised and the current and/or expected status of payments, accounting for and reporting of, or any other specified activities associated with current or future mineral product sales are as represented by Client and/or mining operator.

Mining, Processing and Administrative Costs: Unless otherwise stated in the report, actual or expected cash costs associated with the activities being performed or contemplated to be performed on the property being appraised are as represented by Client and/or mining operator.

Discuss your mineral property appraisal, mining business valuation, or other mineral industry related concerns with Mineral Business Appraisal:
Michael R. Cartwright  michael@minval.com
Five Claret Court, Reno, NV  89512-4744
Tel/Fax: 775-322-9028

Return to Mineral Business Appraisal Home page

Back  Mineral Appraisal-Valuation Glossary
or Client Mineral Valuation Education Information

Next Assumptions and Limiting Conditions-Part 2

Go to Mineral Business Appraisal Table of Contents