Economic Comparison of Mineral Exploration and Acquisition Strategies to Obtain Ore Reserves

An analytical framework is formulated to assist mining companies in assessing the relative merits of mineral exploration and acquisition strategies. The anticipated costs, risks, and returns of each strategy are conceptualised using decision trees. Economic criteria - expected net present value, expected return per unit of investment, and the probability of success - for each strategy are derived(from the appropriate decision tree network. Application of the analytical framework is illustrated using the example of a medium-size company in the Canadian base metal sector.