Evaluation of a mining project using Discounted Cash Flow analysis, Decision Tree analysis, Monte Carlo Simulation and Real Options using an example
MetadataShow full item record
Investments in the mining and minerals industry are considered to be risky. The major challenge of project evaluation is how to deal with the uncertainty involved in capital investment. Discounted Cash Flow (DCF) methods, Decision Trees (DT), Monte Carlo Simulation (MCS) and Real Options (RO) are commonly used for evaluating mining projects. This paper briefly reviews the previous studies, outlines and summarises above four methods. Subsequently it employs these methods to evaluate a mining project where the decision whether or not to open the mine is considered. Pros and cons of investigated methods are discussed in the final section. © 2008 Inderscience Enterprises Ltd.
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 ...
Evaluation of a mining project under the joint effect of commodity price and exchange rate uncertainties using real options valuationHaque, Md Aminul; Topal, Erkan; Lilford, E. (2016)Cash flows generated by mining projects tend to be volatile and are extensively influenced by exogenous variables, notably commodity prices and exchange rates. The traditional discounted cash flow (DCF) method, which is ...
Shafiee, S.; Topal, Erkan (2012)Accurate cost estimation is a critical component of mining project evaluation to determine whether the proposed project is clearly feasible, doubtfully feasible or clearly uneconomic. At the beginning of the process, it ...