Adjusted real option valuation to maximise mining project value – A case study using century mine

Shafiee, S., Topal, E. and Nehring, M. (2009). Adjusted real option valuation to maximise mining project value – A case study using century mine. In: , Project Evaluation 2009 [electronic resource] : proceedings : "moving forward in challenging times". Project Evaluation Conference 2009, Melbourne, Australia, (125-134). 21-22 April 2009.

Author Shafiee, S.
Topal, E.
Nehring, M.
Title of paper Adjusted real option valuation to maximise mining project value – A case study using century mine
Conference Paper Type Fully Published Paper
Conference name Project Evaluation Conference 2009
Conference location Melbourne, Australia
Conference dates 21-22 April 2009
Proceedings title Project Evaluation 2009 [electronic resource] : proceedings : "moving forward in challenging times"
Place published Carlton South, Vic.
Publisher Australasian Institute of Mining and Metallurgy
Publication date 2009
Start page 125
End page 134
Total pages 10
Language eng
Abstract/Summary Nowadays mining projects are seeking new versions of evaluation that are based on the flexibility in the project. Real option valuation (ROV) is one of the modern evaluation methods that provides a tool to adapt and revise mining projects under uncertainty and future variable movements. Most evaluation approaches simply assume that some variables are fixed, such as production rate, variable cost, fixed cost and lifetime of project. The first section of this paper reviews a comprehensive study of ROV in mining projects. The paper then introduces a new model that solves problems where previous methods lacked. The new method endeavours to find maximum mining project value by adding total cost as a function of production rate into ROV. The second section has been applied to a new model on the Century zinc mine in north-west Queensland, thus illustrating the future overview of that mine. The new version of ROV gave a significant positive value for the Century Mine, when the closure and reopening options where available throughout the life of the mine. Consequently, the new method evaluates real options to add value to mining projects, maximising project’s value, estimating cost function, optimising production rates and offers opportunities in projects to amplify gains or to mitigate losses.
Subjects 0913 Mechanical Engineering
Q-Index Code EX
Additional Notes Description: 1 CD-ROM ; 4 3/4 in. Publication series (Australasian Institute of Mining and Metallurgy), 3/2009

Document type: Conference Paper
Sub-type: Fully Published Paper
Collection: School of Mechanical & Mining Engineering Publications
 
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Created: Mon, 11 Oct 2010, 14:08:37 EST by Ms May Balasaize on behalf of Faculty Of Engineering, Architecture & Info Tech