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Valuation Simulation for a Net Smelter Return Royalty on a Mining Project

Peter Bell ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper provides a rough calculation of the economic value of a hypothetical mining operation for a profitable of mineral deposit. I present simplifying assumptions for the deposit geometry and mine production constraints to calculate the value of a net smelter recovery royalty on the mine, which is due a small fraction of gross income from the mine. I calculate the value of the royalty with constant prices and conduct a simulation exercise where the metal price changes quarterly based on historical data for gold futures contracts.

Keywords: Engineering Economics; Mining; Royalties; Finance (search for similar items in EconPapers)
JEL-codes: C00 G00 L7 L72 (search for similar items in EconPapers)
Date: 2018-07-01
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