Evaluation Of Mining Project Investments Using A System Dynamics Approach - SME Annual Meeting 2026

Investment decisions in the mining industry are complicated by sector-specific uncertainties. This study presents a multi-submodule system dynamics model to capture the dynamic complexities of decision-making across mineral property development stages. The model includes five interconnected subsystems: valuation, production, growth strategy, demand, and finance. Developed through system decomposition, expert input, and literature, the model is tested on a hypothetical copper mine with 850 ktpa capacity and 1% cu grade. Simulated over five years with quarterly steps, it estimates an enterprise value of $78.9 million and a target growth rate of 11.2%. Results highlight the significant effects of operating costs, capital policies, and inflation on free cash flow, and the critical role of mineral reserves in sustaining growth. This model supports strategic investment analysis across different minerals and development phases, offering mining investors a robust tool for optimizing decisions.