Evaluating Multi Zone Ore bodies of the Raglan nickel deposit using current planning techniques complemented by Real Option Pricing.
CIM Edmonton 2004
Jean-Marie Clouet, Richard Poulin,
The Société minière Raglan du Québec ltée has been in production since 1998 and has produced annually some 900 000T of ore grading 3.1% nickel, 0.9% copper and 0.06% cobalt. The mine is located in Northern Quebec in the Nunavik. The current mine life is estimated at approximately 20 years. Reserves are composed of numerous small ore bodies situated across a 65 km strike. Planning the extraction of the ten small ore bodies represents a great challenge to optimize.
The overall objective is to maximize the company’s return on net assets. Actual planning uses computerized technology tools like Automod and Mine 24D, and conventional discounted cash flow method (DCF) of calculating net present value (NPV). The complex setting of Raglan could benefit from advance valuation techniques such as the real options method (RO). This paper will present the characteristics if the mines that make it a good candidate to use RO to gain further insight.
Real options, Economics, Planning, Falconbridge, Artic, Raglan