Flexibility valuation in operating mine decisions using real options pricing

Sean Dessureault, Vassilios N. Kazakidis, Zachary Mayer

Research output: Contribution to journalArticlepeer-review

9 Scopus citations

Abstract

The introduction of flexibility into the mine engineering process is required to counter the downturns and provide the ability to exploit the upturns that can develop. Flexibility can be assessed through real options techniques. However, the determination of volatility, a key variable in real options valuation, needs to be quantified. New information technologies are greatly expanding the capabilities of quantification of volatility. This paper presents the methods that can be used for the calculation of process and project volatility in operations and provides practical applications from mining operations in the USA and Canada.

Original languageEnglish (US)
Pages (from-to)656-674
Number of pages19
JournalInternational Journal of Risk Assessment and Management
Volume7
Issue number5
DOIs
StatePublished - 2007

Keywords

  • Data warehousing
  • Flexibility
  • Mining operations
  • Operating uncertainty
  • Real options
  • Risk management
  • Simulation
  • Volatility

ASJC Scopus subject areas

  • Business and International Management
  • Statistics, Probability and Uncertainty
  • Management Science and Operations Research

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