Industries / Mining and metals
Put ranges on grade, recovery and metal prices, and see what they mean for life-of-mine NPV and the investment case.
ModelRisk
Tamara
ModelChoice
PelicanNPV of a copper mine
10,000 futures
One NPV hides a 14% chance of losing money. The range shows it, and the drivers say why.
Clients in mining and metals
The lifecycle
Seven stages, each with its own question. Pick one to jump to it.
Questions we answer
Charts marked with a model code come from a free example model you can open in Excel. The others are marked illustrative.
ModelChoicePay for information before committing. Phased exploration has the highest expected value, $15.6M, against $13.6M for a full programme and $2.0M for selling the rights.
ModelRiskSee how early technical uncertainty flows into production potential and mine life.
ModelRiskSee the whole range of value and what drives the downside, instead of one NPV and three scenarios.
ModelRiskSet contingency for the confidence level you need instead of a flat 15%. Here the estimate holds in a third of futures and P80 needs $943M.
TamaraFind which activities drive the date before you commit to offtake.
The plan says first ore in month 32.
Only 19% of futures make month 32; P80 is month 37.6.
ModelRiskLink operational uncertainty to the production and cash flow of the life-of-mine plan.
TamaraPlan maintenance windows and lost production on realistic durations.
The plan says 14 days.
Only 18% of futures finish in 14 days; P80 is 16.9 days.
ModelRiskValue the option to wait as well as the decision to build. Starting small and deciding later has the highest mean NPV; building big now loses money in 36.4% of futures.
Mean NPV $16.1M
PelicanOne register for HSE, operational and project risk, through to closure. It exchanges risks and results with Tamara and takes in results from your ModelRisk models.
| Site | Risk | Owner | Before | After | Status |
|---|---|---|---|---|---|
| North Pit | Slope instability | Geotechnical lead | 20 | 8 | Mitigating |
| Process plant | Mill liner failure | Maintenance manager | 16 | 6 | Mitigating |
| Tailings | Seepage from the tailings dam | Environment manager | 15 | 6 | Mitigating |
| Haul roads | Light vehicle interaction | HSE manager | 16 | 4 | Mitigating |
| Port | Shipping delay | Logistics manager | 12 | 6 | Open |
How it fits together
Built in ModelRisk, in Excel.
ModelRiskReserves and geologyTonnage, grade, recovery.ModelRiskCapEx, OpEx and risksCost ranges and discrete risk events.ModelRiskCash-flow modelVolumes, revenue, costs.ModelRiskCommodity pricesPrice paths and correlations.OG-04 ModelRiskSimulation and insightsPercentiles, drivers, scenarios.Free example models
One mining decision tree so far. The others use the same methods on other assets: cost contingency, schedule risk, valuation, real options, price forecasting and plant reliability.
Mining Exploration DecisionA junior mining company holds exploration rights to a promising copper-gold prospect in a remote region.Cost Estimate with ContingencyHow much contingency does the warehouse budget need?Schedule Risk on a Project NetworkWhen will the new bridge open?Investment Appraisal of a New Production LineThe business case says invest. What does the risk say?Real Options: Expand or AbandonBuild big now, or start small and decide later?Oil Price Forecast from HistoryWhich price deck should the five-year plan use?Reliability and Availability of a Production LineHow often will the line stop, what does it cost, and is a standby machine worth it?Spare Parts and Maintenance StrategyRun to failure or replace on a schedule — and how many spare kits to hold?Training
Risk analysis modelling courses can focus on your industry and on the problems you model, online or face-to-face.
See the coursesConsulting
Our consultants review your resource, valuation or schedule model before a critical decision or a public review.
See consultingFAQ
A flat percentage says nothing about how likely the budget is to hold. Simulating the cost ranges and risk events gives the budget at each confidence level, so you can set contingency at P80 or at whatever level your board chooses.
Yes. The free Mining Exploration example compares a full programme, a phased programme and selling the rights, with a commodity price cycle in the chance nodes. Phased exploration has the highest expected value, $15.6M.
No. ModelRisk and ModelChoice are Excel add-ins: you add ranges, risk events and decisions to the workbooks you already have. Tamara works on your Primavera P6 or Microsoft Project schedule.
Yes. ModelRisk, ModelChoice and Tamara each have a free 15-day trial, and our team can go through one of your own models with you.
Free 15-day trials of ModelRisk, ModelChoice and Tamara. For Pelican, we'll show it to you on risks like yours.
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