Evaluation of the Mining Projects under Price Uncertainty in Two – Element Deposits Using Binomial Tree Method

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Kakha Gholam Hossein; MONJEZI MASOUD; BASIRI MOHAMMAD HOSSEIN

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Paper Information

Journal: JOURNAL OF ANALYTICAL AND NUMERICAL METHODS IN MINING ENGINEERING Year:2019 | Volume:9 | Issue:20 Page(s): 43-51

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Title

Evaluation of the Mining Projects under Price Uncertainty in Two – Element Deposits Using Binomial Tree Method

Author(s)

Kakha Gholam Hossein | MONJEZI MASOUD | BASIRI MOHAMMAD HOSSEIN | Issue Writer Certificate

Keywords

production planning

tow element deposits

Price Uncertainty

Binomial Tree

Valuation

Net Present Value

Abstract

Summary: Economic parameters uncertainties perform indispensable role in mining eValuation projects, so that, eValuation of a mining project without considering the available uncertainties is incorrect and unreliable. Metal Price Uncertainty is the most important parameters in economic uncertainty. Many researchers have studied the role of economic uncertainties in the production planning. But majority of these studies are conducted in one-element deposits and the two-element deposits are rarely investigated. In this research uses the Binomial Tree technique Valuation to compute the production planning eValuation in tow element deposits under Price Uncertainty. It is concluded that the mine eValuation suggests greater Net Present Value when Price Uncertainty is considered for both element. Introduction: The main sources of uncertainty arising at the beginning of a mine project can be categorized into three groups: geology uncertainties, engineering uncertainties and economic uncertainties. Many researchers studied these types of uncertainties. In majority of the aforementioned researches, Price Uncertainty effect was investigated only for one-element deposits, which can result in an inaccurate Valuation. Therefore, in this paper, The Binomial Tree method was used for determining the effect of Price Uncertainty in Valuation of two-element deposits. Methodology and Approaches: In this research uses the Binomial Tree technique Valuation to compute the production planning eValuation in tow element deposits under Price Uncertainty for four scenarios: Assuming price certainty for both elements; assuming Price Uncertainty for first element and price certainty for second element; assuming price certainty for first element and Price Uncertainty for second element; assuming Price Uncertainty for both elements. Results and Conclusions: It is concluded that the mine eValuation suggests least NPV the amount 245. 05 thousand dollar when price certainty is considered for both elements and greater NPV the amount 349. 6 thousand dollar when Price Uncertainty is considered for both elements. The sensitivity analysis shown that even by changing in input economic parameters, the NPV, which was computed in price uncertain for both elements, was the greatest.

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APA: Copy

Kakha, Gholam Hossein, MONJEZI, MASOUD, & BASIRI, MOHAMMAD HOSSEIN. (2019). Evaluation of the Mining Projects under Price Uncertainty in Two – Element Deposits Using Binomial Tree Method. JOURNAL OF ANALYTICAL AND NUMERICAL METHODS IN MINING ENGINEERING, 9(20 ), 43-51. SID. https://sid.ir/paper/266068/en

Vancouver: Copy

Kakha Gholam Hossein, MONJEZI MASOUD, BASIRI MOHAMMAD HOSSEIN. Evaluation of the Mining Projects under Price Uncertainty in Two – Element Deposits Using Binomial Tree Method. JOURNAL OF ANALYTICAL AND NUMERICAL METHODS IN MINING ENGINEERING[Internet]. 2019;9(20 ):43-51. Available from: https://sid.ir/paper/266068/en

IEEE: Copy

Gholam Hossein Kakha, MASOUD MONJEZI, and MOHAMMAD HOSSEIN BASIRI, “Evaluation of the Mining Projects under Price Uncertainty in Two – Element Deposits Using Binomial Tree Method,” JOURNAL OF ANALYTICAL AND NUMERICAL METHODS IN MINING ENGINEERING, vol. 9, no. 20 , pp. 43–51, 2019, [Online]. Available: https://sid.ir/paper/266068/en

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