A Comparative Study Of The Net Present Value Method And The Real Option Method In The Evaluation Of Mining Rights

This paper’s central theme is the mining right evaluation, the real option theory in economics as arguments, and from two aspects of theory and examples compare the net present value method and real options method research, offers a new train of thought and approach for mining right evaluation, contribute to the result of precise value of mining right evaluation.With time and the development of economy and a rising demand for mineral resources in China. People’s living and national economy’s development cannot leave the mineral resources, it is the material base of social development, has extensive uses. At present our country95%of the energy, more than80%of industrial raw materials,70%of the agricultural means of production are from mineral resources. But according to statistics, by2010, need45kinds of main minerals can guarantee in our country and some can only for export coal, zinc, tungsten, tin, molybdenum, antimony, rare earths, magnesite, gypsum, barite, talc, sodium salt, cement raw materials, glass raw materials, stone, silica lime and23species of diatomite, etc; Basic guarantee to need of uranium, lead, strontium, phosphorus, asbestos, refractory clay, but production is declining trend year by year; Oil, natural gas, iron, manganese, copper, aluminum, gold, silver, boron, sulfur, iron to wait mineral resources not only cannot guarantee the need, and part of the need to import; And cobalt, platinum group, is a serious shortage of mineral resources such as potassium, diamond, mainly rely on imports. This shows that our country and relative lack of backup base of mineral resources reserves and, its supply relying on international market increasing. Visible, the rational development and make full use of existing mining mineral resources, mining potential of mineral resources and to find new mineral resources is imminent.The way to alleviate mineral resources situation in China is through the mining right circulation in the market, the elements to attract investment in mining production, to achieve the optimal allocation of mineral resources, mining reproduction cycle to complete implementation, and mining right circulation must be to evaluate it. Formed at home and abroad is given priority to with net present value method of mining right evaluation methods for mining industry to take proper account of the uncertainty of the discount rate selection difficulties, cash flow forecast is not accurate and can’t reflect the mining right holder defects such as flexibility, thus not scientific to evaluate the value of mining right. In addition, China’s mining right evaluation methods as a whole and present practice first, theory lags behind. So the application of real option theory can solve the problem of large mining right valuation uncertainty, and on the evaluation method as the theoretical basis.Based on the real option theory as the main arguments, Black-Scholes (hereinafter referred to as B-S model) model for calculating the foundation, through the net present value method and real options method to make comparison and analysis, with examples of the evaluation results under the two methods are compared, which proves that the real option method can make up for the net present value method in two aspects of mining project management flexibility and strategic value of defects, namely the option value. But this does not mean that should abandon the traditional net present value method, because based on the mining right evaluation value is under the real option method consists of two parts, net present value and option value, it ensures that the integrity of the mining right value. So for more uncertainty factors of mining industry, using the real option method of mining right value assessment more reasonable and more scientific.