Economic Evaluation of Mineral Deposits
Economic geology and mineral economics encompass a variety of activities. One important aspect of these disciplines is the identification and evaluation of mineral deposits. Part of this work is largely technical in nature. Explorationists, for example, use the tools of geology, geochemistry, geophysics, and other fields to identify mineral deposits. They then study the deposits to determine if they exhibit the physical and chemical characteristics typical of similar deposits that have been developed into mines; and, in the case of a new type of deposit, to draw inferences on the basis of new scientific knowledge. Other parts of this work, however, are largely economic in nature. Economists, engineers, and others work together to evaluate a mineral deposit’s economic potential by comparing the expected revenues from mine production with the associated expected costs of further exploration, development, and production. It is their task to determine if the expected revenues from developing a deposit will be sufficiently in excess of costs to provide investors with an adequate return on their investment. Still other parts of the work may be socio-economic in nature, if a government is involved; the concern here is how the development of a deposit will affect the overall economic and social development of a region or country.
KeywordsDiscount Rate Cash Flow Internal Fund Mineral Deposit Payback Period
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