NPV Upside Potential

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NPV Upside Potential is the process of generating and analyzing scenarios to measure the impact of each constraint on the project’s net present value (NPV), from the Super Best Case to a detailed setup. Measuring the impact of each constraint on the NPV is important to assess the financial impact and ensure the project’s viability under different scenarios and conditions. Each constraint can have a significant impact on the project’s NPV, and it is crucial to understand how they affect the project’s financial performance.

By evaluating the impact of each constraint on the project’s NPV, it is possible to identify financial bottlenecks and opportunities for improvement, as well as prioritize problem resolution. This can result in better resource allocation and cost reduction, enhancing the project’s profitability and viability.

In NPV Upside Potential, scenarios are created that sequentially incorporate each constraint of the project, allowing users to have a comprehensive view of the impact of each constraint on the project’s performance. In case more efficiency is needed, the resulting surface obtained on the Constraints Validation or in Best Case refinements could be used as Restrict Mining in the last interval, which might reduce the complexity and the runtime.

Example

Dataset: Preinstalled Marvin deposit. It can also be downloaded here.

To illustrate this process, let’s consider the base scenario of the Marvin dataset (shown in the figure below). The highlighted green fields represent all the targeted constraints that need to be controlled in this project: process capacity, minimum average grade of CU in process, dump capacity, bottom minimum width, mining minimum width and maximum vertical rate.

The decision tree depicted below has been constructed for a NPV Upside Potential process, based on the above scenario. In this decision tree, the scenarios progressively introduce each constraint into the project.

The target scenario is the last one, with the following restrictions: Process Production=10mt, Dump Production=30mt, Bottom Width=100m, Mining Width=100m, Vertical Rate=150m, and average CU=0.5. However, the constraints are added interactively, starting with the process production, followed by the dump production, widths, and so on.

Note how the cumulative NPV usually decreases (as expected) when more restrictions are added (see note at the end for exceptions). Without this interactive process, there might be a lack of information to understand the NPV of the final, desired scenario.

Amount of constraints and NPV relationship

More constraints usually lead to lower NPV. The exceptions for that are the geometric constraints, which deal with non-linear restrictions. If you are not happy with the results achieved after adding geometric constraints you might need to perform a Selectivity Analysis or Best-Worst Range Analysis of your project.

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NPV Upside Potential

Example

Amount of constraints and NPV relationship

CONTENTS

Ask GPT

Multivariate Sensitivity Analysis

Bottleneck Analysis

NPV Enhancement

Design Enhancement

Selectivity Analysis

Best-Worst Range Analysis

NPV Upside Potential

Protected: Getting Started

Protected: Validation stage

Protected: Formatting stage

Protected: Destinations and economic values