Uncertainty assessment for the evaluation of net present value of a mineral deposit

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2008
Erdem, Ömer
The profitability of a mineral deposit can be concluded by the comparison of net present values (NPV) of all revenues and expenditures. In the estimation of NPV of a mineral deposit, many parameters are used. The parameters are uncertain. More accurate and reliable NPV estimation can be done with considering the related uncertainties. This study investigates the probability distributions of uncertain variables in estimation of NPV and evaluation of NPV using Monte Carlo simulation. @Risk 4.5.7 software package is used to apply Monte Carlo simulation method. At the end of the study, all possible net present values and their probabilities are given as a probability distribution. Dereköy copper ore reserve is selected to apply uncertainty assessment in NPV of ore reserves. The reserve is evaluated using both conventional polygonal method and a mining software which is Micromine. The southeastern part of the reserve was selected as a study area because average grade of the reserve is relatively low and the reserve extends to a larger area. At the end of the assessment, NPV of the southeastern part of Dereköy ore reserve was found to be between $77.97×106 and $318.78×106 with 68.27% (x±σ) probability and between $45.37×106 and $443.54×106 with 95.45% probability (x±2σ).

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Citation Formats
Ö. Erdem, “Uncertainty assessment for the evaluation of net present value of a mineral deposit,” M.S. - Master of Science, Middle East Technical University, 2008.