P/NAV

takes the current share price and compares it with the value of the asset over the life of the mine. The Net Asset Value is all future cash flows with existing cash and minus any debt. The result shows the value of an investment in the project.

The P/NAV when calculated for a number of companies will over time suggest a benchmark figure. The mining industry has settled on a 0.7x NAV. This accounts for a higher degree of risk since a NAV should be typically set to 1.0.