Sensitivity Analysis Of Cash-Flow Factors To Discounted Rate Of Return -A Decision Making Tool (4e0aa8bf-dd9b-41c8-9626-85ffb72cbfdd)

The report shows the sensitivity that nine different cash-flow factors have on the discounted rate of return calculated from feasibiliity- studies on potenital open-pit orebodies of silver, copper, and uranium. Cash-flow factors of "grade", "market value", and "recovery" are. the most sensitive. This verifies the need of reliable estimates for these factors. The cost of evaluation of "preproduction cost" is the least sensitive. This gives credence to the fact that more consideration should be given to compiling sufficient data, as the largest financial losses are not in the cost of evaluation but rather in the abandonment of an unprofitable mining operation after a commitment of capital is made on the basis of an incomplete evaluation. Sensitivity analysis of cash-flow factors enhances evaluation programs by disciplining the collection of data and allowing more realistic distribution of evaluation monies.