Evaluation of a mining project using Discounted Cash Flow analysis , Decision Tree analysis , Monte Carlo Simulation and Real Options using an example.

Erkan Topal

Research output: Contribution to journal › Article

26 Citations (Scopus)

Abstract

Investments in the mining and minerals industry are considered to be risky. The major challenge of project evaluation is how to deal with the uncertainty involved in capital investment. Discounted Cash Flow (DCF) methods, Decision Trees (DT), Monte Carlo Simulation (MCS) and Real Options (RO) are commonly used for evaluating mining projects. This paper briefly reviews the previous studies, outlines and summarises above four methods. Subsequently it employs these methods to evaluate a mining project where the decision whether or not to open the mine is considered. Pros and cons of investigated methods are discussed in the final section.
Original languageEnglish
Pages (from-to)62-76
Number of pages15
JournalInternational Journal of Mining and Mineral Engineering
Volume1
Issue number1
DOIs
Publication statusPublished - 2008

Fingerprint

Monte Carlo analysis
decision analysis
Mineral industry
Decision trees
simulation
minerals industry
mining industry
project
method
evaluation
Monte Carlo simulation
decision
Uncertainty

Keywords

  • 2008
  • analysis
  • dcf
  • decision
  • decision tree analysis
  • discounted cash flow
  • evaluation of a mining
  • flow analysis
  • follows
  • mcs
  • mine project evaluation
  • monte carlo simulation
  • project using discounted cash
  • real options
  • reference to this paper
  • ro
  • should be made as
  • topal e

Cite this

Evaluation of a mining project using Discounted Cash Flow analysis , Decision Tree analysis , Monte Carlo Simulation and Real Options using an example. / Topal, Erkan.

In: International Journal of Mining and Mineral Engineering, Vol. 1, No. 1, 2008, p. 62-76.

Research output: Contribution to journal › Article

Topal, E 2008, 'Evaluation of a mining project using Discounted Cash Flow analysis , Decision Tree analysis , Monte Carlo Simulation and Real Options using an example.', International Journal of Mining and Mineral Engineering, vol. 1, no. 1, pp. 62-76. https://doi.org/10.1504/IJMME.2008.020457
Topal E. Evaluation of a mining project using Discounted Cash Flow analysis , Decision Tree analysis , Monte Carlo Simulation and Real Options using an example. International Journal of Mining and Mineral Engineering. 2008;1(1):62-76. https://doi.org/10.1504/IJMME.2008.020457
Topal, Erkan. / Evaluation of a mining project using Discounted Cash Flow analysis , Decision Tree analysis , Monte Carlo Simulation and Real Options using an example. In: International Journal of Mining and Mineral Engineering. 2008 ; Vol. 1, No. 1. pp. 62-76.
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