INVESTMENT PROJECT ANALYSIS PIT C2 BLOCK 8 USING DISCOUNTED CASH FLOW (DCF) & REAL OPTIONS VALUATION (ROV) (CASE STUDY OF PT.BERAU COAL)

• Main Author: Bahri S, Syamsul
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/69762
• Institution: Institut Teknologi Bandung

Pit C2 Block 8 Binungan Mining Operation Area 2 PT Berau Coal is one of the coal mining operational areas with multi-seam characteristics, coal seam slope at intervals of 40 – 60 degrees, the thickness of coal seam at intervals of 0.5 – 5 meters, and variations thickness between loads. at intervals of 3 – 300 meters. The characteristics of coal deposits are one of the considerations in the formation of coal mining designs in collaboration with other disciplines, including geotechnical, hydrology, safety, and environment, as well as other aspects. The economic evaluation of a mining project is very important for the next process to determine whether a mining project plan is feasible or not for mining. The method used so far to carry out economic evaluation is the Discounted Cash Flow (DCF) method which gives all risks to cash flows until the end of the project, but there is another method, namely Real Options Valuations (ROV) which allows the company's flexibility to control risk with variable uncertainty. This final project assesses the economic evaluation of mining projects at Pit C2 using the DCF and ROV methods where the results of these two methods will be compared and as a consideration for the company to continue investing in mining projects at Pit C2. NPV DCF USD 22.0 million, while NPV ROV USD 28.0 million. And timing options to speed up production criteria NPV, IRR, and Payback period show better results than base options. From the results of the economic evaluation parameters using the DCF and ROV methods, the company will consider and make a decision whether to continue the project by considering several risks or cancel the investment and not continue mining in Pit C2.