Risk assessment procedure for economic-geological and cost estimate of mineral deposits

I. D. Kotlyarov, S. V. Petrov

Research output: Contribution to journalArticlepeer-review

6 Scopus citations


The present paper substantiates the demand for a unified grid of risk premiums in appraisal of mineral reserves and resources. An algorithm of construction of such a grid is proposed. This algorithm is based on correlation between the value of risk premium, the category of geological information about reserves (resources) and the class of geological complexity of mineral reserves (resources). Recurrent formulae are proposed for accurate calculation of risk premiums. As against the existing grids of risk premiums, the proposed model is based on mathematical calculation rather than on expert estimation of risk premiums. It helps reduce the impact of subjectivity. It also helps easily modify the grid if necessary. In addition, the proposed model takes into account the nonlinear growth of risk premiums with decrease of amount of information available about mineral reserves (resources). This nonlinearity is almost absent in the existing grids of risk premiums. The proposed grid of risk premiums is used as a basis for the evaluation method for economic effectiveness of geological exploration. This method takes into account not only the increase of mineral reserves (resources), but also the decrease of risk of the reserves appraisal and the decrease of risk premium. This method helps calculate additional economic effect that is neglected in the existing methods. The main inconvenience of the proposed unified grid of risk premiums is that it disregards specific features of mineral reserves that may have a great impact on risk evaluation. That is why the proposed method should be used at earlier stages of geological exploration when it is necessary to make decision about the use of mineral reserves (resources). A more precise evaluation of risk should include expert estimations.

Original languageEnglish
Pages (from-to)94-99
Number of pages6
JournalGornyi Zhurnal
Issue number9
StatePublished - 1 Jan 2014

Scopus subject areas

  • Geotechnical Engineering and Engineering Geology


  • Cost estimate of deposits
  • Discount rate
  • Estimation of actual reserves and undiscovered potential reserves of hard minerals
  • Geological-andeconomic appraisal of deposits
  • Risk premium


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