Production phase and ultimate pit limit design under commodity price uncertainty
MetadataShow full item record
Open pit mine design optimization under uncertainty is one of the most critical and challenging tasks in the mine planning process. This paper describes the implementation of a minimum cut network flow algorithm for the optimal production phase and ultimate pit limit design under commodity price or market uncertainty. A new smoothing splines algorithm with sequential Gaussian simulation generates multiple commodity price scenarios, and a computationally efficient stochastic framework accommodates the joint representation and processing of the mining block economic values that result from these commodity price scenarios. A case study at an existing iron mining operation demonstrates the performance of the proposed method, and a comparison with conventional deterministic approach shows a higher cumulative metal production coupled with a 48% increase in the net present value (NPV) of the operation.
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 ...
Kim, Yoochan ; Ghosh, Apurna ; Topal, Erkan ; Chang, Ping (2022)Understanding the interdependency of commodity market pricing system is very important for running a successful mining business. Much of the iron ore price is derived from the prices of other commodities. This study ...
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 ...