Preliminary Study of Economic Feasibility of a Project of Aggregates Mining Through Probabilistic Analysis

Economic feasibility study of a quarry mine under contractual risk in probabilistic approach

“…Price composition, capital and operational expenditures (CAPEX and OPEX), taxes, contributions and compensation are exposed in Tables 1 to 5, and such information was obtained from Juvenal [9] and Mariz et al [10]. In Table 1, the average production rate, estimated around 25,000 m 3 / month, was subdivided in 55% to clients of the Northern Area of Recife through the DDP (Delivered Duty Paid) modality, 25% would be collected by the customers in the quarry through EXW (Ex Works) modality, and the remaining 20% would be delivered to clients in the Southern area through the DDP modality.…”

“…Besides "Annual SELIC (%) (MARR)" addition, the difference from former researches is given to the "Maximum Value" column of the "Monthly production rate (m 3 )" line, which became a variable, as shown in Figure 3. Considering the capacity of mobile machinery and the processing plant, Juvenal [9] and Mariz et al [10] considered 55,000 m 3 as maximum monthly production rate, but longer lifetimes couldn't afford this constant production, due to the exhaustion of the reserves. As this study intend to perform a yearly analysis, the maximum capacity to avoid the mineral reserves exhaustion was considered in each scenario assessed.…”

“…They considered three times the annual SELIC (Special System of Settlement and Custody) of August 2018 (6.5%) as MARR, totalizing 19.5%. Hence, they submitted the cash flow to MARR according to the length of the project and obtained the NPV of R$24MM, which allies to an IRR of 169.22% (among other promising rates), and indicates the probable profitability of the project assuming the accuracy and immutability of the restrictions over time [9,10].…”

“…Then, a sensitivity analysis was performed, which indicated, through a percentage graph of explained variation, that only two of the nine variables selected were relevant to the result, and other 100,000 scenarios were simulated considering only such variables. This probabilistic analysis showed that there was a 99.77% probability rate for the NPV to be positive, and 49.98% for it to be greater than or equal to the deterministic NPV (Figure 1) [9,10].…”

“…Juvenal [9] and Mariz et al [10] carried out an economic evaluation analysis at Mega Mineração (Mineração Megaípe), a project implemented from the beginning of 3/8 Tecnol Metal Mater Min. 2021;18:e2309 risk of breach of contract between the company who owns the mining rights and Mega Megaípe, valid for 15 years, was not considered in the former analyses, and this possibility would render such concretization unviable, due to the reduction of operating time.…”