EVALUATING OF NICKEL MINING PROJECT USING REAL OPTION VALUATION METHOD WITH MULTINOMIAL MODEL
Indonesia has enormous reserves of nickel laterite compared to other countries in the world, which has resulted in the increasing attractiveness of investing in nickel mining projects in Indonesia. The investment feasibility value and the risks faced by a mining project before mining activities b...
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| Format: | Theses |
| Language: | Indonesia |
| Online Access: | https://digilib.itb.ac.id/gdl/view/70146 |
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| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | Indonesia has enormous reserves of nickel laterite compared to other countries in
the world, which has resulted in the increasing attractiveness of investing in nickel
mining projects in Indonesia. The investment feasibility value and the risks faced
by a mining project before mining activities begin are quite high, so it is necessary
to study the investment value of a nickel mining project to trigger investors to invest.
In nickel ore mining projects, mining project evaluation generally does not take
into account uncertain economic factors, such as fluctuations in selling prices and
fluctuations in mining costs. Usually, the company will assume that the selling price
and mining costs will be constant throughout the life of the mine using the
discounted cash flow (DCF) method. Therefore, another method is needed that can
determine the evaluation of project values and take into account these
uncertainties, namely the real option valuation (ROV) multinomial model. With this
method it can be seen how much the evaluation value of nickel ore mining projects
is based on changes in selling prices and mining costs. The results of this evaluation
can see the value of the option premium and net present value between the DCF
method and the multinomial model ROV, so that the model can be proven to be used
as a basis for making decisions.
The ROV method is expected to increase the evaluation value of mining projects
that accommodate the possibility of an uncertainty, so as to increase stakeholder
confidence in decision making. This research can be a benchmark in determining
the evaluation value of a project. The results show that the multinomial model
provides a higher option premium value than the binomial lattice. This shows that
the more uncertainty that can be overcome, the greater the rate of return on
investment value. |
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