Mining & Metals · Mining / Metals
Monte Carlo Capital Review of a Copper Mine Expansion
An illustrative engagement: running an independent Monte Carlo review across copper price, capex and permit delay for a brownfield expansion in the Central African copperbelt.
Challenge
A mid-tier miner is preparing a board paper to approve a brownfield expansion. The internal case leans on a single long-run copper price, a schedule the operating team privately considers aggressive, and a tailings-management assumption the country office has flagged as politically fragile. The chair asks for an independent read before the paper goes to the committee.
Solution
We run the expansion case as a joint Monte Carlo across copper price calibrated to a long LME window, local-currency exposure on operating costs, EPC productivity drawn from the operator's own history rather than the vendor benchmark, and a permit-delay distribution built from comparable African brownfield expansions. Community and tailings-permit risk are quantified with the country office. Every assumption behind the base case is named, sourced and stress-tested.
Results
The downside NPV comes in negative at the vendor schedule and long-run price. The board approves a scaled and re-phased expansion — smaller in year one, with an explicit trigger for the second phase tied to price and permit milestones. Assumptions the original paper had underweighted are re-negotiated with the EPC contractor before award.
Future Applications
The same review discipline is extended to a satellite deposit and the group's next feasibility study, and the tailings-risk quantification approach becomes a reference method for the group sustainability committee.
