Project 2.8

The traditional evaluation metric the mining industry calculates an opportunity’s Net Present Value (NPV) using a discounted cash flow (DCF) compliant technique. This project aims to answer the question, “Does the use of NPV as calculated through a DCF technique enable appropriate provisioning for mine closure costs?”. To answer this overarching research question, the following sub-questions will be addressed:

• What is missing from traditional NPV assessments that should be considered in any financial provisioning for closure?
• Does NPV incorporate a pre-determined discount rate, calculated using a DCF-compliant technique, to drive desired behaviour in the mining industry for closure- i.e., investment in closure planning and progressive rehabilitation?
• What evidence is available for how NPV is used in the mine closure space, and what were the outcomes?
• What are the key components of how NPV is traditionally calculated that do not work for closure, and why?

This desktop study will use publicly available literature and data to produce an evidence-based assessment of the use of the traditional NPV methodology for mine closure provisioning, describing its effectiveness where actual closure outcomes are available for comparison. The research will result in a publication that adequately defines the issues associated with using the traditional NPV methodology and highlights what needs to be changed, added to, or taken away from that methodology to make the assessment metric fit for purpose.