Chapter 13: Quantifying the risk
Given the relative complexity of a mining financial model and the uncertainty over many of the input assumptions, several methods can be used to help determine where the greatest risk might lie and how that might impact on a mining project’s valuation, and these are described in this chapter. Sensitivity analysis looks at the relative sensitivity of input parameters, while probability analysis incorporates the inputs simultaneously. Finally, the payback period lets us know how long our greatest risk exposure might be.
Sensitivity analysis
Sensitivity analysis is commonly used to show how the valuation might change if outcomes prove to be different from what has been assumed. The simplest way is to look at the ...
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