Abstract
The options to suspend production from an operating mine, reopen the mine, and abandon the mine are exercised according to definite decision rules based on the status of the price of the produced mineral. Because of the nonrenewable characteristic of the mineral assets, the threshold mineral prices for exercising these options depend on the remaining life of the mine, or the remaining amount of ore reserve. This paper aims to explain how to construct a decision scheme showing the dynamics of the threshold prices throughout the mine life. A case study is provided using the data of Red Lake gold mine, Northwest Ontario, Canada. The threshold price for exercising the suspending option at the early stages of production is found to be higher than that estimated near the end of the mine life. As the remaining life of the mine decreases, the threshold prices to reopen and abandon the mine increase. This paper also suggests a method to determine the maximum suspending period and explains its dependence on the remaining life of the mine. It is found that there is a direct relationship between the maximum suspending period and the remaining life of the mine. As the remaining life of the mine decreases, the maximum suspending period decreases.
Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
