Comparison between traditional project appraisal methods and uncertainty analysis applied to mining planning

Abstract Long-term mining planning is a complex process which involves a large number of variables and uncertainties. Traditional discount cash flow (DCF) is usually used in the evaluation of mining projects. DCF includes net present value (NPV), internal rate of return (IRR), and profitability inde...

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Bibliographic Details
Published in:REM - International Engineering Journal 2020-06, Vol.73 (2), p.261-265
Main Authors: Fontes, Marcélio Prado, Koppe, Jair Carlos, Albuquerque, Nelson
Format: Article
Language:English
Subjects:
discount cash flow, Monte Carlo simulation, uncertainties
ENGINEERING, MECHANICAL
GEOLOGY
MECHANICS
METALLURGY & METALLURGICAL ENGINEERING
mining planning
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Summary:Abstract Long-term mining planning is a complex process which involves a large number of variables and uncertainties. Traditional discount cash flow (DCF) is usually used in the evaluation of mining projects. DCF includes net present value (NPV), internal rate of return (IRR), and profitability index (PI). A sensitivity analysis is usually carried out to evaluate the impact of the main variables on the project. Another way to measure uncertainties is through the Monte Carlo simulation (MCS). The objective of this study is to evaluate and compare the DCF methods and measure uncertainties through sensitivity analysis and MCS in the evaluation of mine sequencing. A case study of a phosphate mine project was used to chart the comparative study. In the results, NPV and uncertainty analysis through MCS were more consistent.
ISSN:2448-167X
2448-167X
DOI:10.1590/0370-44672019730108