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Methods of Licence Subsoil Evaluation

Student: Anzhelika Garaeva

Supervisor: Mariya Molodchik

Faculty: Faculty of Economics, Management, and Business Informatics

Educational Programme: Finance (Master)

Year of Graduation: 2018

According to the subsoil laws, these subsoil within the territory of the Russian Federation are owned by the state. The use and disposal of subsurface resources by individuals or legal entities is permitted on the basis of licenses for the right to use. In the framework of valuation activities, there are many ways and approaches to determine the value of rights to a given intangible asset, in particular, the most profitable, comparative and costly approaches in which appropriate methods are applied. This work is a project-analytical work, the methodology of which is the basis of the assessment report made for the organization of N. The purpose is to determine the market value of the exclusive right to use subsoil for mining granodiorites by appropriate valuation methods. The methods of valuation were directly studied and recommended for application directly to determine the market value of the license for the right to use subsoil for the extraction of granodiorites. For a more objective assessment of the effectiveness and risks of the project, it is advisable to apply a revenue approach, within which real options method, capitalization method and discounted cash flow method are applied. A distinctive feature of this work will be the calculation of the capitalization rate, using Inwood and Ring models. As a result of the coordination of the indicators, each of the applicable methods was assigned weights according to the conformity of the method to the type of the object, sufficiency of the information, the ability to take into account the structure of the pricing factors specific for the valuation object. Thus, it is advisable to apply the largest weight coefficient to the method of real options, since the specificity of the valuation object is that it is this method that is realized directly in case of underestimation of licenses for the right to use subsoil for mining granodiorites.

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