Valuation of the Sechahoon XI Mine Using a Real Options Portfolio and Linear Programming

Document Type : Research Article

Authors

1 Dept. of Management and Accounting, Farabi Faculty, University of Tehran, Qom, Iran

2 Dept. of Mining and Metallurgical Engineering, Yazd University, Yazd, Iran

10.22034/anm.2026.24724.1734

Abstract

Mining projects are considered one of the riskiest yet most profitable areas of investment in the world. The main source of these risks is related to the uncertainty present in geological models, geomechanical models, exploitation operations, mine geometry, crushing and processing, environmental factors, and the economic model, including fluctuations in the final product price and production costs. Improper management of mine production planning will lead to the wastage of natural resources. This research, using a portfolio of real options, seeks to find the best decision that maximizes mining profit. The titles of mining real options are shown in Figure 1. The study of this research focuses on the Sechahoon XI iron ore mine, with the aim of physical optimization of the final pit limit and optimization of management decisions in real options. Modeling in this research was carried out in two separate parts: first, the final pit limit of the studied open-pit mine was optimized and designed using the Lerchs-Grossmann method. Then, the real options model was used for mine valuation using the influence diagram, regression, and simulation method.

Keywords

Main Subjects

References

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History

  • Receive Date: 08 June 2026
  • Revise Date: 05 July 2026
  • Accept Date: 14 July 2026

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