The Resource Valuation and Optimesation Model: Real Options Impact for the Mining Industry

This paper presents the scientific framework underpinning the Resource Valuation and Optimisation Model (RVOM). The RVOM is a Real Options software package, which helps mine owners optimally plan their operations, understand their project risks, and make defensible valuations. This is achieved in the presence of both financial and physical uncertainty. The three key outputs from the RVOM are: Valuation, Optimal Decision and Probability of Decision, where a decision can include any combination of: normal operation, expanded operation, care and maintenance, and abandonment (and variants thereof). This paper presents a clear example of the RVOMs usage to a case-study gold mine.