Investment Analysis, Based On Real Options And Scenario Analysis Methods Of Mineral Resource Projects

Recently years, international metal market is active , and the metal price also rise significantly . Many countries pay attention to the exploitation of mining projects. The mining option is allowed to be traded in mineral market since the Chinese mining revision law published in 1996..It is important that exploitation of mining projects and merger & acquisition will be estimated based on scientific evaluation .The standard of Chinese mining evaluation refer to the foreign standard of application .There are three ways to evaluate mining projects ,including cost evaluation ,sale in market evaluation and NPV .Today, NPV has been used widely in estimation of investment .The real options is an advanced theory which studies the uncertain factors in investment .This paper describes the condition of world mining market ,and the differences among the different evaluation of miningl projects. Also, this paper emphasizes the real options in application of mining projects, and scenario analysis is a assistant evaluation in strategy of mining project .We will investigate and evaluate a project under three conditions in a demonstration case.Firstly, we will use NPV way to evaluate the project based on the certain currents ,and compute and discount currents ,then we will get the project value.Secondly, we will use the binomial approach to construct current tree under the uncertain gold prices in future ,then we will get a different project value.Thirdly, we will study the expansion option ,delay option and abandon option ,and use the best strategy to evaluate the project in each node .finally,we get strategy tree .At last, this paper uses scenario analysis to simulate the expansion strategy ,going on strategy ,and abandon strategy according to all affected factors based on the financial model.In summary ,this paper studies and investigates the mining projects using ways of market analysis, scenario analysis, rational evaluation ,and real options .At last,we build a scientific decision-making model .Not only ,this paper adapts to the development of active mining market ,also ,this paper give the mine investor a good way to make decision in investment of project.