Few valuation exercises are as sensitive to assumption as a resource project. Small changes to commodity price decks, discount rates, recovery rates or production ramp-up schedules can move a valuation by multiples, not percentages. That sensitivity makes resource valuations unusually easy to present optimistically without technically misstating anything.
The most common pitfall we see is the use of long-run commodity price assumptions that sit at the top end of historical ranges, applied without sensitivity analysis showing what happens at more conservative price levels. A valuation that only survives at peak pricing is not a valuation — it is a best-case scenario presented as a base case.
A second common issue is production ramp-up that assumes best-in-class operational performance from day one, ignoring the commissioning, staffing and logistical realities that almost always slow early-stage output below nameplate capacity. Funders who have seen enough of these projects build in their own discount for this; sponsors who acknowledge it upfront, with a credible ramp-up curve, tend to be taken more seriously.
Discount rates deserve equal scrutiny in the other direction — a rate that is too conservative can make a genuinely strong project look marginal, while a rate that is too aggressive flatters a weak one. The right discount rate reflects the specific risk profile of the project and jurisdiction, not a generic industry average pulled from a textbook.
Good practice is to present a valuation range built on a base case, an upside case and a clearly conservative downside case, each with its assumptions stated explicitly. A single-point valuation, however precise it looks, tells a sophisticated funder far less than a well-reasoned range — and invites exactly the scepticism a sponsor is trying to avoid.
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