Ariz. Admin. Code § 15-4-206

Current through Register Vol. 30, No. 45, November 8, 2024

Section R15-4-206 - Determination of Value

A. The income approach shall be the primary method for the determination of full cash value of mines and shall ordinarily be considered the best indicator of value. The cost and market approaches shall also be considered and correlated with the income approach where applicable.

B. The income approach shall be the primary method of valuation except when 1 or more of the following situations exist:

1. Ore reserves of the mine are wholly or predominantly located on nontaxable lands. The value indicated by the cost approach shall be determinative of the full cash value of the mine.

2. The mine property has recently commenced production, or has recently been added to the mine rolls.

3. The mine property is near the end of its economic life;

4. Operations of the mine have resulted in an overall loss, as determined by the historic margin. If estimates of future cash flow can reasonably be made, the income approach shall be utilized. If estimates of future cash flow cannot reasonably be made, the value of the mine shall approximate the property's residual value with appropriate obsolescence applied.

5. Permanently shutdown mines shall be valued at salvage.

6. A sale of the mine unit, or a sale as described in R15-4-205, has occurred within the preceding 12 months. In this case either the income or market approach may be the primary method of value. When the market approach is selected as the primary method of value, the income and cost approaches shall also be considered.

C. In situations (B)(2) and (B)(3) above, the value indicated by the cost approach shall be considered with the value indicated by the income approach with the relative weight to be applied as follows.

1. If estimates of future cash flow can reasonably be made, the income approach shall be weighted more heavily.

2. If estimates of future cash flow cannot reasonably be made, the cost approach, with appropriate obsolescence, shall be weighted more heavily.

D. Full cash value shall never be less than salvage value.

Ariz. Admin. Code § R15-4-206

Adopted effective December 10, 1985 (Supp. 85-6). Amended effective May 24, 1989 (Supp. 89-2).