Valuing Future Opportunity: Using Options Valuation Methods to Improve Investment Decision-Making” is presented by Benjamin Teschner, Colorado School of Mines. Mining companies have historically used deterministic discounted cash flow models to determine the net present value (NPV) and internal rate of return (IRR) of a proposed mining project. Typically, these values are used as the primary metrics to determine whether to advance a project to the construction phase. Unfortunately, these models do not tell the whole story. They inherently assume that the development decision must be made now and that revenues and costs will remain unchanged over the life of the project. This presentation will walk through the Options Valuation approach which incorporates the value of management’s flexibility to delay construction into the future. The presentation will apply stochastic simulations to the Options Valuation approach and show how changes in commodity prices, capital and operating costs can lead to a suite of project values and construction timing. The presentation will concluded by showing how an investor might use this approach to determine the likelihood that a property will result in a mine, and the appropriate hurdle rate to use for a construction decision based on the company’s risk tolerance.