Optimisation with options
MetadataShow full item record
We provide a valuation framework for mining projects incorporating options to vary mining, processing and stockpiling rates, options to alter processing and stockpiling cutoff grades, options to expand mining and processing capacities and the option to abandon. Each of these real operating options is exercisable in response to price variability for the mineral being mined. With a case study application, we demonstrate that project optimisation with recognition of real options (versus without) entails: increased project value, as expected; and, at project outset, prescription of lower processing capacity (with lower associated capital expenditure), higher processing cutoff grade and greater use of stockpiles.
Copyright © 2011 Institute of Materials, Minerals and Mining
Showing items related by title, author, creator and subject.
A numerical study for a mining project using real options valuation under commodity price uncertaintyHaque, M; Topal, Erkan; Lilford, Eric (2014)Commodity price is an important factor for mining companies, as price volatility is a key parameter for mining project evaluation and investment decision making. The conventional discounted cash flow (DCF) methods are ...
Maybee, Bryan; Fava, L. (2011)As underground mine planning tools become more sophisticated, mine planners have the capacity to investigate numerous mine sequencing options to identify the best strategy for a given project, creating higher value for ...
Maybee, Bryan (2012)In underground mine planning, many potentially value-eroding decisions are made due to a lack of time and proper evaluation practices. The information required for mine planning decisions goes beyond external sources of ...