Economics – Price Forecasting and Sensitivity Analysis for Economic Analysis of Final Pit Limit

INTRODUCTION Forecasting of metal and mineral prices is a complex and hazardous undertaking. In order to accurately forecast prices, the complexities of both marketing and production must be modeled for each commodity. Even with the most detailed model, the economy may change unexpectedly, invalidating the forecast. Because of these factors, this chapter will not attempt to present specific methods for price estimation. It will, however, review the fundamentals of price forecasting as applied to planning and design of the final pit shell. Recognizing that no price estimate can be exact, sensitivity analysis will be reviewed as an approach to coping with these unknown variations.