When it comes to evaluating mining projects, uncertainty plays a significant role, particularly in the analysis of mining economic characteristics, which makes the assessment of a mining project erroneous and untrustworthy. The volatility of mineral prices is a major cause of economic ambiguity and concern. Economic uncertainty has extensively been examined in mining production project planning, but the majority of the study has focused on single-element deposits, with little emphasis devoted to the significance of pricing uncertainty in two-element deposits. Using a three-dimensional tree model, this study investigates how design could be affected by the pricing uncertainty of two different elements. In this model, not only annual volatility but also monthly volatility were considered due to momentary changes in the price of several elements. To authenticate the proposed model, a numerical example was resolved using discounted cash flow, binomial tree, pyramid tree, and three-dimensional modeling techniques. The results of each approach were compared to those of real-world data. Following the findings of the current investigation, it can be concluded that the values derived from the suggested model (a net present value of $ 324.2 thousand) are more precise than the values acquired from other approaches, and that they are just 8% out of step with reality. Other methods, on the other hand, come up with results that are at least 17% and at most 39% different from those that come from real data.
Dagdelen, K., "Open pit optimization-strategies for improving economics of mining projects through mine planning", in 17th International Mining Congress and Exhibition of Turkey. Vol. 117, (2001), 121.
Johnson, T.B., "Optimum open pit mine production scheduling, University of California, Berkeley, (1968).
Dagdelen, K., "Optimum open pit mine production scheduling by lagrangian parameterization", Proc. of the 19th APCOM, (1986), 127-142.
Caccetta, L. and Hill, S.P., "An application of branch and cut to open pit mine scheduling", Journal of global optimization, Vol. 27, No. 2, (2003), 349-365. doi: 10.1023/A:1024835022186.
Boland, N., Dumitrescu, I., Froyland, G. and Gleixner, A.M., "Lp-based disaggregation approaches to solving the open pit mining production scheduling problem with block processing selectivity", Computers & Operations Research, Vol. 36, No. 4, (2009), 1064-1089. doi: 10.1016/j.cor.2007.12.006.
Elkington, T. and Durham, R., "Integrated open pit pushback selection and production capacity optimization", Journal of Mining Science, Vol. 47, No. 2, (2011), 177-190. doi: 10.1134/S1062739147020055.
Wang, Q. and Sevim, H., "Enhanced production planning in open pit mining through intelligent dynamic search", Institute of Mining Metallurgy (ed), Vol. 23, (1992), 461-471. doi: 10.1007/s11771-018-3841-5.
Denby, B. and Schofield, D., "Open-pit design and scheduling by use of genetic algorithms", Transactions of the Institution of Mining and Metallurgy. Section A. Mining Industry, Vol. 103, (1994).
Khan, A. and Niemann-Delius, C., "Production scheduling of open pit mines using particle swarm optimization algorithm", Advances in Operations Research, Vol. 2014, (2014). doi: 10.1155/2014/208502.
Sattarvand, J., "Long-term open-pit planning by ant colony optimization", Aachen, Techn. Hochsch., Diss., 2009, (2012),
Shishvan, M.S. and Sattarvand, J., "Long term production planning of open pit mines by ant colony optimization", European Journal of Operational Research, Vol. 240, No. 3, (2015), 825-836. doi: 10.1016/j.ejor.2014.07.040.
Abdel Sabour, S. and Poulin, R., "Mine expansion decisions under uncertainty", International Journal of Mining, Reclamation and Environment, Vol. 24, No. 4, (2010), 340-349. doi: 10.1080/17480931003664991.
Dimitrakopoulos, R., Farrelly, C. and Godoy, M., "Moving forward from traditional optimization: Grade uncertainty and risk effects in open-pit design", Mining Technology, Vol. 111, No. 1, (2002), 82-88. doi: 10.1179/mnt.2002.111.1.82.
Marcotte, D. and Caron, J., "Ultimate open pit stochastic optimization", Computers & Geosciences, Vol. 51, (2013), 238-246. doi: 10.1016/j.cageo.2012.08.008.
Yazdani, M., Kabirifar, K., Fathollahi-Fard, A.M. and Mojtahedi, M., "Production scheduling of off-site prefabricated construction components considering sequence dependent due dates", Environmental Science and Pollution Research, (2021), 1-17. doi: 10.1007/s11356-021-16285-0.
Tahernia, T. and Ataee-pour, M., "A model for determination of block economic value in underground mining", Iranian Journal of Mining Engineering, Vol. 10, No. 28, (2015), 43-51. doi: 20.1001.1.17357616.13126.96.36.199.1.
Samis, M., Davis, G.A., Laughton, D. and Poulin, R., "Valuing uncertain asset cash flows when there are no options: A real options approach", Resources Policy, Vol. 30, No. 4, (2005), 285-298. doi: 10.1016/j.resourpol.2006.03.003.
Shafiee, S., Topal, E. and Nehring, M., "Adjusted real option valuation to maximise mining project value–a case study using century mine", in Project Evaluation Conference, Citeseer. (2009), 125-134.
Dehghani, H. and Ataee-Pour, M., "Determination of the effect of operating cost uncertainty on mining project evaluation", Resources Policy, Vol. 37, No. 1, (2012), 109-117. doi: 10.1016/j.resourpol.2011.11.001.
Dehghani, H. and Ataee-Pour, M., "The role of economic uncertainty on the block economic value–a new valuation approach", Archives of Mining Sciences, Vol. 57, No. 4, (2012). doi: 10.2478/v10267-012-0066-6.
Mokhtarian Asl, M. and Sattarvand, J., "Integration of commodity price uncertainty in long-term open pit mine production planning by using an imperialist competitive algorithm", Journal of the Southern African Institute of Mining and Metallurgy, Vol. 118, No. 2, (2018), 165-172. doi: 10.17159/2411-9717/2018/v118n2 a10.
Souza, F.R., Câmara, T.R., Torres, V.F.N., Nader, B. and Galery, R., "Optimum mine production rate based on price uncertainty", REM-International Engineering Journal, Vol. 72, (2019), 625-634. doi: 10.1590/0370-44672018720093.
Rimélé, A., Dimitrakopoulos, R. and Gamache, M., "A dynamic stochastic programming approach for open-pit mine planning with geological and commodity price uncertainty", Resources Policy, Vol. 65, (2020), 101570. doi: 10.1016/j.resourpol.2019.101570.
Jamshidi, M. and Osanloo, M., "Multiple destination influence on production scheduling in multi-element mines", International Journal of Engineering, Transactions A: Basics, , Vol. 31, No. 1, (2018), 173-180. doi: 10.5829/ije.2018.31.01a.23.
Cox, J.C. and Ross, S.A., "The valuation of options for alternative stochastic processes", Journal of Financial Economics, Vol. 3, No. 1-2, (1976), 145-166. doi: 10.1016/0304-405X(76)90023-4.
Cox, J.C., Ross, S.A. and Rubinstein, M., "Option pricing: A simplified approach", Journal of Financial Economics, Vol. 7, No. 3, (1979), 229-263. doi: 10.1016/0304-405X(79)90015-1.
Copeland, T. and Antikarov, V., "Real options, Texere New York, (2001).
Dehghani, H., Ataee-pour, M. and Esfahanipour, A., "Evaluation of the mining projects under economic uncertainties using multidimensional binomial tree", Resources Policy, Vol. 39, (2014), 124-133. doi: 10.1016/j.resourpol.2014.01.003.
Osanloo, M. and Ataei, M., "Using equivalent grade factors to find the optimum cut-off grades of multiple metal deposits", Minerals Engineering, Vol. 16, No. 8, (2003), 771-776. doi: 10.1016/S0892-6875(03)00163-8.
Kakha, G. and Monjazi, M., "Push back design in two-element deposits incorporating grade uncertainty (research note)", International Journal of Engineering, Transactions, B: Applications, Vol. 30, No. 8, (2017), 1279-1287. doi: 10.5829/ije.2017.30.08b.22.
Kakha, G. H. (2022). Design of Open Pit Mines using 3D Model in Two-element Deposits under Price Uncertainty. International Journal of Engineering, 35(10), 1906-1917. doi: 10.5829/ije.2022.35.10a.10
G. H. Kakha. "Design of Open Pit Mines using 3D Model in Two-element Deposits under Price Uncertainty". International Journal of Engineering, 35, 10, 2022, 1906-1917. doi: 10.5829/ije.2022.35.10a.10
Kakha, G. H. (2022). 'Design of Open Pit Mines using 3D Model in Two-element Deposits under Price Uncertainty', International Journal of Engineering, 35(10), pp. 1906-1917. doi: 10.5829/ije.2022.35.10a.10
Kakha, G. H. Design of Open Pit Mines using 3D Model in Two-element Deposits under Price Uncertainty. International Journal of Engineering, 2022; 35(10): 1906-1917. doi: 10.5829/ije.2022.35.10a.10