NPV risk simulation

abstract

This paper analyzes an open pit gold mine project based on the O’Hara cost model. Hypothetical data is
proposed based on different authors that have studied open pit gold projects, and variations are proposed
according to the probability distributions associated to key variables affecting the NPV, like production
level, ore grade, price of ore, and others, so as to see what if, in a gold open pit mine project of 3000 metric
tons per day of ore. Two case scenarios were analyzed to simulate the NPV, one where there is low certainty data available, and the other where the information available is of high certainty. Results based on
genetic algorithm metaheuristic simulations, which combine basically Montecarlo simulations provided
by the Palisade Risk software, the O’Hara cost model, net smelter return and financial analysis tools
offered by Excel are reported, in order to determine to which variables of the project is more sensitive
.the NPV

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