Development and Application of a Holistic Quantitative Deterministic Technique for Risk Modelling (Quadrim) in Mine Valuation

In this paper a quantitative deterministic risk modelling approach (Quadrim) is introduced. The mathematical framework and equations for quantifying uncertainty within and aggregating across value chain nodes from error propagation techniques is proposed and discussed. A case study and worked examples, based on a hypothetical mine are then presented. This illustrates how uncertainty from the mining and economic value chains can be handled in a typical net cash flow calculation, and how this can be translated to a risk model. It is then illustrated that current valuation techniques do not just result in an information gap for decision makers. Traditional approaches such as discounted cash flow (DCF) analysis and truck and shovel productivity analysis, which do not take into account uncertainty in input values, can result in potential bias in estimates such as net present value (NPV) or equipment hours