Timing Of Mining Investment Real Option Theory

Mining investment is generally characterized by long time span, enormous investment scale and irreversibility, and this process is inundated with uncertainties. In order to ensure the effectiveness of investment, it is overridingly significant to study the decision of investment opportunity in the case where there is uncertainty. According to the relevant theory of real option, this thesis has systematically studied the decision of mining investment opportunity. The corresponding model was built, and numerical analysis of such model was conducted by using MATLAB. Meanwhile, the economic phenomenon of real investment was explained. The main research efforts of this thesis include:(1) The properties of mining investment program were analyzed. Based on the analytic comparison of traditional decision making method and real share option method, we summarized the advantages and disadvantages of various methods. Besides, according to characteristics of mining investment program, we discussed those research methods of mining investment opportunity, which are based on the real option theory.(2) We set up decision models of optimal mining investment opportunity, when the influence of emergency was considered and was not considered, respectively. Subsequently, we carried out thorough research regarding this situation. On the decision model without emergency, based on the characteristic of relay option included by mining investment, we set up this decision model of investment opportunity selection and found out the rules of optimal investing opportunity. Then we discussed the realistic significance of such model upon national mining investment. On the decision model with emergency, the jump process was introduced to imitate the jump caused by multiple emergency events; therefore, the systematic bias existing on traditional decision model of investment was revised. Moreover, supposing that both frequency and amplitude of this jump were random fluctuated, we designed a kind of numerical solution method for the built real option model, which did not rely on the specific distribution form. Furthermore, we discussed the impact upon investment decision of mining programs, which are brought by various parameters of multiple identical emergency events and multiple different emergency events.(3) Taking the mining investment of Dafa as the case, we studied the decision model of investment opportunity selection. The outcome of such empirical research confirms that the real option approach of mining investment opportunity decision proposed in this thesis is more effective than the traditional one.