HomeCoalUnderstanding the value of your drillhole database

Understanding the value of your drillhole database

Miners spend millions of dollars collecting and storing exploration data. It’s a resource that can add significant value to the business by aiding effective strategic and operational decision-making.

With so much relying on this digital asset, how can a company accurately determine the true worth of its database?

The easiest way to recognise the value of a drillhole database is to assign a dollar value to it, not using traditional accountancy methods, but rather by determining its worth to the business.

With this understanding, the costs of managing and maintaining the data are much easier to justify.

There are several approaches to determine database value, the first is a cost-based valuation where the database value is determined by how much it cost to create it.

Resource companies invest a great deal in developing, maintaining and securing their databases so this calculation is straightforward, but it assumes that the value of a database is static, which it isn’t. The results can therefore be misleading.

If the value isn’t fixed, how do you accurately determine the worth of a database?

It is important for businesses to think beyond the cost of data collection, devices and software set up. The analytical samples and observation data gathered during the exploration phase of a prospective project are stored to be used for economic modelling.

This means that the drillhole database holds information which is key to determining the viability of the entire project and this should be factored in its valuation.

All valuations are context-based and, in the case of a drillhole database, the value depends on the asset’s usefulness to the business.

For instance, if a company has spent $10 million collecting and storing data about an uneconomic deposit, that knowledge and confirmation has some value, but the database would hold far more value for the business if the deposit was a viable one.

These results are not set in stone. Economic conditions change and the value of a drillhole database fluctuates as the current and future earnings from the deposit change.

Viable deposits can become less financially attractive and uneconomic deposits can become profitable, drastically changing the value of their databases.

Another valuation method is based on the replacement value of a drillhole database. This is a flexible and effective approach to gauge how much benefit the business derives from having access to the database.

The question to ask is: “What price would we prepared to pay to restore our database if it was lost or compromised?”

The answer can be anything from $0, to a figure which far surpasses the initial data collection cost. While this approach is subjective, when carefully considered, the valuation can be justified.

This valuation can also be done using different assumptions: “What if all the raw data files used to populate the database no longer existed; what would we spend on collecting this data again?”; or “What if we only had access to raw data, how much would we spend to collate and reload it to a central repository?”.

The value placed on the database will vary depending on the value the business places on its data as well as the severity of the fictitious data loss.

Having a database that easily delivers high quality data to your business is critical for the efficient transformation of data into information and knowledge.

It is the accumulation of knowledge that creates corporate wisdom. With the database’s power to shape wisdom, and enhance your probability of success, what price tag would you place on it?

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