Observatorio de I+D+i UPM

Memorias de investigación
Real Options: A Tool for Managing Technical Risk in a Mine Plan
Research Areas
  • Operative research,
  • Economic methodology,
  • Company
NPV is a static financial measure of project value which does not discriminate between levels of internal and external risk in project valuation. A much more complex model is needed: one that includes the value of flexibility and the different risk levels associated with variables subject to uncertainty (price, costs, exchange rates, grade and tonnage of the deposits, cut off grade, among many others). Few of these variables present any correlation or can be treated uniformly. In this context, Real Option Valuation (ROV) arose more than a decade ago, as a mainly theoretical model with the potential for simultaneous calculation of the risk associated with such variables. This paper reviews the literature regarding the application of Real Options Valuation in mining, noting the prior focus on external risks, cases of successful industry applications and directions for further application to the technical risks associated with mine planning
Society for Mining, Metallurgy and Exploration (SME)
Entity Nationality
Seattle, Washington, USA
  • Autor: Jose Antonio Botin Gonzalez (UPM)
Research Group, Departaments and Institutes related
  • Creador: Grupo de Investigación: Sistemas de Gestión de Mejora continua en la Empresa de Materias primas Minerales
  • Departamento: Explotación de Recursos Minerales y Obras Subterráneas
S2i 2020 Observatorio de investigación @ UPM con la colaboración del Consejo Social UPM
Cofinanciación del MINECO en el marco del Programa INNCIDE 2011 (OTR-2011-0236)
Cofinanciación del MINECO en el marco del Programa INNPACTO (IPT-020000-2010-22)