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Uncertainty Valuing of Mining Projects Based on Option Pricing Theory

Xiangzhou Chen

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Abstract

Because of the similar characteristics between the optional chance of mining investment and America rising option,we study in this paper the valuing investment opportunity of mining projects and establishing its model based on Option Pricing Theory. This method develops the mining projects evaluation based on Net Present Value(NPV) method. And also the calculating result of an example based on the method is in line with the people's intuitive need of a higher price in uncertain investment.

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What this paper is about

Because of the similar characteristics between the optional chance of mining investment and America rising option,we study in this paper the valuing investment opportunity of mining projects and establishing its model based on Option Pricing Theory. This method develops the mining projects evaluation based on Net Present Value(NPV) method. And also the calculating result of an example based on the method is in line with the people's intuitive need of a higher price in uncertain investment.

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Available abstract

Because of the similar characteristics between the optional chance of mining investment and America rising option,we study in this paper the valuing investment opportunity of mining projects and establishing its model based on Option Pricing Theory. This method develops the mining projects evaluation based on Net Present Value(NPV) method. And also the calculating result of an example based on the method is in line with the people's intuitive need of a higher price in uncertain investment.

Key concepts: Net present value, Investment (military), Valuation of options, Actuarial science, Value (mathematics), Investment value, Economics, Black–Scholes model

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