5. On the Use and Validity of Probabilistic Methods in Mine Valuation ? Introduction

The future is uncertain. In these circum- stances how can we rationally decide whether to commit funds to an investment that may or may not turn out to be successful? To date no certain answer to this problem has been found, nor is one likely to be found in the future. At best we can attempt to assess the possible outcome in terms of probability, taking into account all sources of information that may be available at the time the decision must be made. This subject is addressed with some trepidation and much humility. Any attempt to fore- tell the future is by its very nature controversial. The purpose of ' this .chapter is to present a proposed rationale for decision making under uncertainty which relates the probabilistic risk of the investment to the capacity of the firm to absorb possible unfavorable consequences if they should occur. It is not the intention to propose a cut-and-dried methodology but rather to examine the conceptual philosophy on which a methodology may be based.