TY - JOUR

T1 - Risk assessment procedure for economic-geological and cost estimate of mineral deposits

AU - Kotlyarov, I. D.

AU - Petrov, S. V.

PY - 2014/1/1

Y1 - 2014/1/1

N2 - 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.

AB - 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.

KW - Cost estimate of deposits

KW - Discount rate

KW - Estimation of actual reserves and undiscovered potential reserves of hard minerals

KW - Geological-andeconomic appraisal of deposits

KW - Risk premium

UR - http://www.scopus.com/inward/record.url?scp=84922542002&partnerID=8YFLogxK

M3 - Article

AN - SCOPUS:84922542002

SP - 94

EP - 99

JO - Gornyi Zhurnal

JF - Gornyi Zhurnal

SN - 0017-2278

IS - 9

ER -