Investment and

Ore Reserve Problem

Rini Novrianti Sutardjo Tui
Defining Investment

Investment

Assets ownership more

than 6 months

Commitment
Funds or At This Future
Resources Moment Profit
Real Assets vs Financial Assets

Assets
of Investment

Real Assets are Financial

tangible things owned
by persons and
Assets are what
one individual has lent
businesses, such as
to another, such as
residential structures
consumer credit, loans,
and properties,
mortgages.
automobiles, office
towers, factories,
mines, machinery and
equipments.
Main Investment Goals

1 2 3
To increase prosperity. To avoid decreasing To cut-off tax payment;
assets’ value because of there is tax cut-off for
inflation. certain investment.
Other Investment Goals

Degree of
Necessity

Strategic Market
Investments Share

Investment

Infrastruc Customer
ture Relations
Capital Investment Decisions

Allocating Financing

Allocating capital funds to Obtaining necessary

specific investment projects financing in such proportion
or assets. as to increase the overall
value of firm.
 Reserve Definitions

Estimates are Quantity and grade Quantity is

Proved
Possible

Probable
based on an are computed from compiled from
assumed continuity information similar dimensions
beyond probable or to that used for revealed in
proved reserves, for proved reserve, but outcrops, trenches,
which there is the sites for workings or drill
geological inspection, holes. Grade or
evidence. It may or sampling, and quality is computed
may not be measurement are from the results of
supported by further apart. detailed sampling.
samples or
measurements.
Process of Evaluating

Ore Reserves

Cut-off Grade Mine Size

Production
Costs
Mining Investment Environment

Non-
Capital renewable
Intensity

Long Pre-
production High Risks
Period
Risks in Mining Investment

• Exploration risk
Geological Risks
• Scarcity risk

Engineering Risks • Technological risk

• Price fluctuation
Economic Risks • Monetary risks
• Competition risk

• Change in governing regime

Political Risks
• Change in mining policy
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