4:40 PM - 5:00 PM
[2K0201-11-11] [Student presentation: Doctoral course] Incorporating Economical, Geological, and Technological Uncertainties of Mining Project in Real Option Methodology
司会：笹岡孝司 (九州大学)
Keywords:Real Option Analysis, Multi Uncertainties, Project Evaluation, Multi-Stage Stratified State Aggregation
The sale of reserves is the only source of revenue for a mining firm. It means that a particular number of reserves (geological) and a certain selling price (economical) will generate a certain amount of money. Cost (technological) calculations, on the other hand, establish a mining project's profitability. However, there is a lot of unpredictability in these three profit determinants.
To account for uncertainties, the Real Option (RO) technique replaces the Discounted Cash Flow (DCF) methodology. However, due to its mathematical difficulty (Haque et al, 2014) and application, RO's value is currently restricted (Ajak and Topal, 2015). The Black Scholes Method (Black, Scholes, 1973) and Lattice Valuation (Cox et al, 1979) are two common RO approaches that could not measure a project with many uncertainties. The Multi-Stage Stratified State Aggregation (MSSA) technique (Barraquand and Martineau, 1995; Adachi et al, 2008) is used in this study to determine the value of a mining project while taking into account economic, geological, and technological uncertainty. Case studies were undertaken at PT Timah Tbk's tin mining operation in Indonesia, with a focus on short-term mine planning for underwater mining. Historical data is used to quantify price and cost uncertainties, whereas conditional simulation is used to assess geological uncertainty (Dowd, 1994).
In conclusion, mining uncertainties may be modeled using RO, hence the MSSA technique is used to analyze multi-uncertainty and multi-stage mining (rainbow option). Furthermore, management freedom to keep or terminate the project might help to alleviate uncertainty.
To account for uncertainties, the Real Option (RO) technique replaces the Discounted Cash Flow (DCF) methodology. However, due to its mathematical difficulty (Haque et al, 2014) and application, RO's value is currently restricted (Ajak and Topal, 2015). The Black Scholes Method (Black, Scholes, 1973) and Lattice Valuation (Cox et al, 1979) are two common RO approaches that could not measure a project with many uncertainties. The Multi-Stage Stratified State Aggregation (MSSA) technique (Barraquand and Martineau, 1995; Adachi et al, 2008) is used in this study to determine the value of a mining project while taking into account economic, geological, and technological uncertainty. Case studies were undertaken at PT Timah Tbk's tin mining operation in Indonesia, with a focus on short-term mine planning for underwater mining. Historical data is used to quantify price and cost uncertainties, whereas conditional simulation is used to assess geological uncertainty (Dowd, 1994).
In conclusion, mining uncertainties may be modeled using RO, hence the MSSA technique is used to analyze multi-uncertainty and multi-stage mining (rainbow option). Furthermore, management freedom to keep or terminate the project might help to alleviate uncertainty.
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