INVESTMENT EVALUATION AND DECISION-MAKING OF MINING PROJECTS WITH OPTION PRICING THEORY

Investment in mining projects is influences with many uncertainties.Theses uncertainties provide the investment opportunity for mining investments.But Traditional mining projects evaluation method,NPV,cannot involve this uncertainties.Based on the study of the prices of mining outputs and the analysis of the uncertainties of mining costs and revenue,and by means of Option Pricing Theory(OPT),an dynamic programming model is developed to provide a helpful approach and quantitative tools for mining projects evaluation and investment.