Grade uncertainty embedded in long term scheduling: stochastic mine planning

Cherchenevski, Pablo Koury; Costa, João Felipe Coimbra Leite; Rubio, Ricardo Hundelshaussen

doi:10.1590/0370-44672018720119

Cited by 3 publications

(2 citation statements)

References 5 publications

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“…Variations in boundary conditions can have a significant impact on ultimate pit determination, production scheduling, cash flows and on a final project return of millions of dollars (Dimitrakopoulos et al, 2002;Peroni, 2002). The large number of parameters and the numerous sources of uncertainty must be identified properly in the process of project elaboration due to the great financial risk inherent to the decision making at this stage, where risks can be classified as geological, economic and socio-political (Cherchenevski et al, 2019).…”

Section: Introductionmentioning

confidence: 99%

Stochastic economic feasibility assessment and risk analysis of a quarry mine focusing on the Brazilian tax system

et al. 2023

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An economic feasibility study must consider the uncertainties inherent to a mining project, whose risks must be quantified properly to enable accurate decisionmaking. Studies previously carried out through the Discounted Cash Flow (DCF) methodology in the project evaluated here -a quarry whose operations are currently interrupted, located in Pernambuco, Brazil, formerly taxed under the presumed profit regime -indicated a positive Net Present Value (NPV) in the deterministic scenario, therefore projecting a profitable project. However, a probabilistic analysis using Monte Carlo simulations indicated only a 49.98% occurrence probability for this NPV. An assessment focused on the company's taxation was never carried out, which is a gap that the present study intends to fill, in addition to evaluating the feasibility of immediate investment in this project. Furthermore, this is a gap in Brazilian literature in general, which does not take into account the taxation system in their economic assessments. In this context, considering scenarios whose taxation was based on real and presumed profit regimes, we reassessed the cash flows of this quarry and performed deterministic and probabilistic economic analyses, and compared the results of both scenarios. The sensitivity analysis indicated that the production rate would be the most impactful variable in the project's NPV, considering the six variables assessed. Hence, it was verified in both deterministic and probabilistic analyses that taxation under real profit, results in a higher economic return with a 56.08% probability of the NPV being positive and with the Internal Rate of Return (IRR) higher than inflation (SELIC rate) at 4.81%; the taxation under the presumed profit, on the other hand, obtained respective probabilities of 46.54% and 3.23%. However, with the chances of obtaining some profit (NPV greater than zero) at the order of 50% and a minimal chance of the IRR being greater than the SELIC rate adopted at the time of this study, we would advise against investing in this venture. Moreover, even if the current moment is not the most suitable for investment in this sector, regardless of the production rate assessed in the probabilistic analysis, taxation on the real profit regime presented a greater economic return than taxation on the presumed profit regime., indicating that, for the parameters considered in this study, the first would be the most appropriate choice of tax system for this type of enterprise in Brazil.

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Section: Introductionmentioning

confidence: 99%

Stochastic economic feasibility assessment and risk analysis of a quarry mine focusing on the Brazilian tax system

et al. 2023

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show abstract

“…Due to the large number of parameters considered, mine planning is associated with numerous sources of uncertainty, which are fundamental to the development of mining projects, mainly due to the great financial risk inherent to decision making at this stage. Thus, it is necessary to understand and identify these sources, so as to measure and control risks, such as geological, economic and socio-political uncertainties [1][2][3][4].…”

Section: Introductionmentioning

confidence: 99%