Risk model of planned profit from a surface mining venture

A risk model for assessment of the uncertainty in the forecasts of the planned profit is developed. It is based on the selling price of the metal recovered from the ore and the production per shift of the excavators. These two critical variables characterise the economic and technical aspects of the mining venture. Time-series methodology is used to describe the behaviour of the economic variable, which improves the adequacy of the modelling. A hypothetical open-pit gold mine is used to illustrate the application of the model. Results obtained show that the model is a good alternative to sensitivity analysis in taking account of the stochastic character of the price of the metal recovered from the excavated ore and the production per shift of the excavators used. The model can be extended by the inclusion of new variables that have a probabilistic nature