Financially Efficient Ore Selections Incorporating Grade Uncertainty

Author: Richmond, A.

Source: Mathematical Geology, Volume 35, Number 2, February 2003 , pp. 195-215(21)

Publisher: Springer

Buy & download fulltext article:

OR

Price: $47.00 plus tax (Refund Policy)

Abstract:



Traditional mining selection methods focus on local estimates or loss functions that do not take into account the potential diversification benefits of financial risk that is unique to each location. A constrained efficient set model with a downside risk function is formulated as a solution. Estimates of this nonlinear mixed-integer combinatorial optimization problem are provided by a simulated annealing heuristic. A utility framework that is congruent with the proposed efficiency model is then used to choose the optimal set of local mining selections for a decision-maker with specific risk-averse characteristics. The methodology is demonstrated in a grade control environment. The results show that downside financial risk can be reduced by around 33% while the expected payoff is only reduced by 1% when compared to ore selections generated by traditional cut-off grade techniques.

Keywords: downside risk; mixed-integer optimization; portfolio theory

Document Type: Research Article

Affiliations: Earth Science and Engineering Department, Imperial College, London SW7 2BP, United Kingdom; a.richmond@ic.ac.uk

Publication date: February 1, 2003

Related content

Key

Free Content
Free content
New Content
New content
Open Access Content
Open access content
Subscribed Content
Subscribed content
Free Trial Content
Free trial content

Text size:

A | A | A | A
Share this item with others: These icons link to social bookmarking sites where readers can share and discover new web pages. print icon Print this page