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

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).


Developing a coal transportation cost estimation model for Turkish coal enterprises
Demir, Ebru; Karpuz, Celal; Department of Mining Engineering (2009)
Transportation cost is an important item in total operating cost of an open pit mining operations. In some projects, the transportation cost may reach to 60 % of total operating cost. Turkish Coal Enterprises (TKİ) delivers the demanded coal to all cities of Turkey within the context of Prime Ministry Social Solidarity and Aid Fund. The project duration, demanded coal amount whether the coal is needed as packed or unpacked form are determined by local governors. In this study, a model is developed through s...
An approach on dilution and ore recovery / loss calculations in minearal reserve estimations at the Cayeli mine, Turkey
Soyer, Nihat; Güyagüler, Tevfik; Department of Mining Engineering (2006)
Dilution and ore recovery/loss have an important role in calculation of mineral reserves. Each percent increase in dilution and decrease in recovery negatively affects economic value of the reserve. These parameters are mainly controlled by the quality of the mine design and stoping practice. This study provides an approach developed for dilution and recovery/ore loss calculations. The contribution of mine design software (MineSight) and the recent survey technique called Cavity Monitoring System (CMS) were...
Estimation of expected monetary values of selected oil fields
Kök, Mustafa Verşan; Akın, Serhat (Informa UK Limited, 2006-07-01)
As there is uncertainty in estimates of capital, reserves, and net present value in the petroleum industry; risk analysis is the key point for an oil company. It is easy to make decisions after quantifying the uncertainty with ranges of possible values and associated probabilities. Instead of deterministic models, probabilistic evaluations give a wide range of outcomes for decision making. Monte Carlo Simulation is a tool that presents different scenarios and yields probability and value relationships in re...
Investigation of bit hydraulics for gasified drilling fluids
Doğan, Hüseyin Ali; Özbayoğlu, Mehmet Evren; Department of Petroleum and Natural Gas Engineering (2004)
Accurate determination of the pressure losses at the bit is very important for drilling practices in petroleum industry. In the literature, there are several studies on determination of the pressure losses. Major focus is concentrated on single phase drilling fluids, which is far from accurate estimation of pressure losses for multiphase fluids, i.e., fluids including a liquid and a gas phase, at the bit. Some of these models are valid for multiphase fluids, however, they are either valid for very high gas ...
Stochastic Models Forpricing And Hedging Derivatives İn Incomplete Makets: Structure, Calibration, Dynamical Programming, Risk Optimization
Tezcan, Cihangir(2009-09-30)
THE PURPOSE AND THE RATIONALE (AMAÇ VE GEREKÇE) The common standard pricing methods of financial assets and derivative instruments determine the price as the fair value. The latter is defined as a unique arbitrage free price in a complete market. It is determined as expected value of the corresponding discounted payoff w.r.t. to a unique equivalent martingale measure (EMM). This method essentially relies on the assumption that that the market is complete, such that the buyer price and seller price match exa...
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.