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Simulation Framework for Economic Modeling of Mineral Resources

Author

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  • Bell, Peter

Abstract

This paper describes an approach to include uncertainty over the commodity price when modelling the economic attributes of a mine plan for a mineral resource. The approach starts with a method to generate price paths from a broad historical set to establish a set of price paths, where the NPV is calculated for each path to generate a distribution for the NPV. It goes on to describes how to use this distribution to compare different mine plans in a manner that is similar to stress testing.

Suggested Citation

  • Bell, Peter, 2018. "Simulation Framework for Economic Modeling of Mineral Resources," MPRA Paper 85075, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:85075
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    File URL: https://mpra.ub.uni-muenchen.de/85075/1/MPRA_paper_85075.pdf
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    Cited by:

    1. Bell, Peter, 2018. "Valuation Simulation for a Net Smelter Return Royalty on a Mining Project," MPRA Paper 87683, University Library of Munich, Germany.

    More about this item

    Keywords

    Mineral Resource; Simulation; Uncertainty; Economics;
    All these keywords.

    JEL classification:

    • C00 - Mathematical and Quantitative Methods - - General - - - General
    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • G1 - Financial Economics - - General Financial Markets

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