Mineral economics, finance evaluation and risk assessment. Another area on which national valuation codes tend to be very specific is classification of mineral assets into categories defined by a phase of exploration lifetime. Mine project evaluation methods of cash inflows and the present value of cash 2. Expert economic evaluation of mineral resources expert economic evaluation, in its broadest sense, is a form of geological and economic evaluation of mineral resources. The length of each task is the duration of the corresponding task.
Fully illustrated to cover the stateoftheart exploration techniques and evaluation of mineral assets being practiced globally, this uptodate reference offers. This paper provides an overview of the dynamic methods for evaluating investment projects in mining industry as well as the examples of their application in practice. This phase of the mining project has several distinct components. Formative evaluation this evaluation takes place during the project to guide future development.
So there is a growing need to collect and synthesize the practice of modern mineral resource estimation into a book for undergraduate students, beginning graduate students, and young geologists and engineers. The best way to value a mining asset or company is to build a discounted cash flow dcf model that takes into account a mine plan produced in a technical report. At least four aspects of the environment in which the project is evaluated may be identified technical, financial, social and politi cal. Fuer homepage valuation of metals and mining companies. Mdip in engineering wh bryan research centre, the university of queensland.
Recent books focus on historical methods or details of geostatistical theory. Key project evaluation techniques include the following. Final technical reportzarshuran gold project jan 2001. The main purpose of this study is to examine the risk level of mining investment projects, based on the monte carlo method. Applications of soil fertility evaluation and recommendation substitute information for resources. Cover may be different than listing and may have sticker sticker residue. Minnitt synopsis a number of countries have introduced codes governing the valuation of mineral assets and securities. Seismic techniques have had relatively limited utilization, due to their relatively high cost and the difficulty of acquiring and interpreting seismic data in strongly faulted and altered igneous terranes, in mineral assessments and exploration at the deposit scale. Valuation methods of mineral resources estrella domingo. The pert diagram of the project is shown in the figure 1.
The paper takes the reader through different stages of metals and mining companies from mineral exploration to mine production and provides an overview of suitable valuation approaches, discussing some of the difficulties and limitations that. Methods for project evaluation march 8, 2004 nuclear energy economics and policy analysis alternative methods present worth pw method future worth fw method annual worth aw method benefitcost ratio bc method internal rate of return irr method nuclear energy economics and 2 policy analysis 1 3804. Methods, investment projects, economic evaluation, mining. In the process, the other issues are also discusseddealt with. The guidebook for evaluating mining project eias reflects many years of experience evaluating the environmental impact assessments eias for proposed mining projects around the world. Pdf economic evaluation and sensitivityrisk analysis of. Summative evaluation this evaluation takes place after completion of a project to appraise its success. Designed to complement traditional engineering texts, this book emphasizes the concepts of mineral project evaluation rather than computational details. Pdf evaluation of mining investment projects with a new software. However, all operations share the same priorities, the maximization of the return on the investment and the maximization of the recovery of the resource. Valuation of mineral resources in selected financial and. Mineral potential projects data releases and webpages.
Mineral exploration and development are informationgathering activities. Calculation of net present value is not the only method used by firms to evaluate investment opportunities. Used books can include moderate writing, highlighting, underlining, marking, or notes. Evaluation results are the basis for making positive or negative investment decisions. However, shallow seismic surveys employ less expensive sources and smaller. The financial assessment, set within the fiscal regime of the host country, will generate standard project evalu ation criteria such as npv and irr. Phased project planning mining companies must have strong frameworks in place for the evaluation and prioritisation of their portfolio investment alternatives. It is a process of ore preparation, milling, and ore dressing. Dcf, decision trees dt and monte carlo simulations mcs are commonly used for evaluation of mining. Mineral potential assessment mineral potential likelihood that an economic mineral deposits could have formed in the area probabilistic approach to mineral deposits instead of deterministic probabilities are conditional on geological processes occurring in an area on geological features indicative of those processes. Tradeoff study on owner or contractor mining for all or part of mining activities during preproduction.
Request pdf mine project evaluation techniques mining industry was always considered as risky business. Lopezdee national statistical coordination board philippines. Both are linked to the optimization of profits, which in mineral operations is done by optimizing the ore cutoff grade, considering the block model geometry. Information about the location and value of the mineral ore deposit is obtained during the exploration phase. Essentials of mineral exploration and evaluation offers a thorough overview of methods used in mineral exploration campaigns, evaluation, reporting and economic assessment processes. Guidelines for technical economic evaluation of minerals. The global mining industry is extremely capital intensive but subject to large swings in profitability due to the high volatility of prices and political risk. Manage fields on sitespecific basis, according to variable crop, soil and environmental conditions often relies on intensive crop and soil testing. The african continent will follow suit in due course considering the importance of the global minerals industry as it relates to the attraction of. Evaluation of capital investments into mining investment projects is a specific. Valuation methods of mineral resources 3 of resources, highlighting the advantages, disadvantages and issues and limitations of each method. National statistical coordination board 1 valuation methods of mineral resources london group meeting, pretoria, south africa, 2630 march 2007. Projects 2 and 3 both have larger ratios than project 1.
Modern practice is to examine the potential for continued exploration to. Evaluating investment projects in mining industry by. Case study 1 rwe produced a mineral resource model of a platinumpalladium deposit in the bushveld complex, south africa. Mining industry was always considered as risky business. A structured approach to assessing individual projects is the first step to ensure rigorous evaluation with investment decisions made on sound financial, social, environmental and. Figure 1 in this representation, the tasks are the vertices of the graph. Evaluation questions will be explained as the first step in making a work plan, and then, basis for judgment, necessary data and data sources, and data collection methods will follow. The unit covers the financial management and project evaluation techniques of mineral and energy technologies. It describes various economic evaluation techniques typically employed including conventional cost analysis, discounted cash flow, and option analysis, their uses, and their relationships. Npv analysis is sensitive to the one of the most common methods to evaluate a mining project is the dcf method. Mineral exploration an overview sciencedirect topics. The start and finish of a task are two stages of the project. In this sense, mineral exploration and development represent a variety of activities that collect information necessary to identify mineral deposits and then evaluate whether they should developed into mines.
National statistical coordination board 1 valuation methods of mineral resources london group meeting, pretoria, south africa, 2630 march 2007 estrella v. There is no support for a prescribed method, a universal model or a black box model. Project analysis and evaluation bureau of land management. Mineral exploration can be technically defined as all the activities and evaluation necessary before an intelligent decision can be made establishing size, initial flow sheet, and annual output of new extractive operation. Each phase of mining is associated with different sets of environmental impacts. Methodologies in the valuation of mineral rights by e. The expected grade distribution for the mining operation was effectively modelled, allowing the client to investigate the expected ore reserves as a function of.
The first process that most of the ores or minerals undergo after they leave any mine, is mineral processing or mineral ore dressing. A comparative study of valuation methodologies for mineral. Malone, is a geologist with an mba, who teaches mine and project evaluation at the university of new south wales. The purpose of mineral exploration is the discovery and acquisition of new mineral deposit amenable to economic. Since the different valuation methodologies cannot be satisfactorily used across all the stages of development of a mineral project, five examples which exemplify certain stages of development are considered. Mine project evaluation techniques request pdf researchgate. In the past, mineral valuations were based very largely on proved and probable reserves. Objective provide accurate andprovide accurate and complete information to the decision maker. Mining project evaluation when you plan a new mine or investment, our worldwide team of multidisciplinary specialists can provide a comprehensive, integrated approach to your viability studies including scoping, feasibility and prefeasibility, due diligence.
The driver behind this research was whether conventional evaluation techniques for mineral projects can evaluate accurately both the spatial and temporal characteristics of project risks in financial terms, due to their inherent nature to understate the true variance, and undervalue or overvalue the actual npv. Mineral potential evaluation section project boundaries as of january 2017 zip, 2. The unit is designed to provide a basic understanding of the fundamental concepts and principles that influence investment and financing decisions of mining projects at the prefeasibility stage. Chapter 2 planning project evaluation this chapter explains key issues to consider for evaluation planning. Essentials of mineral exploration and evaluation 1st edition. Lecture material will be augmented by a range of international case studies and small group assignments that consider both individual project assessments and broader industry trends. Evaluation questions will be explained as the first step in making a work plan, and then, basis for. As a major purpose of project evaluation is to improve value for money, the cost of project evaluation must be balanced against the benefits of improved decision making.
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