Creating maximum value for shareholders with an acceptable risk level within the mine planning process under varying economic and technical factors is becoming a reality. The potential is for significant improvements to the value of a project to be recognized, adding hundreds of millions of dollars in some cases. As design and scheduling tools become more sophisticated, mine planners have the capacity to investigate and review numerous different mine sequencing options to identify the best strategy. The information required for mine planning decisions goes beyond the external sources of uncertainty that are recognized by typical evaluation techniques used in the mining industry to include technical factors (e.g. mine development layout) and the ability of a mineral extraction project to achieve production levels. Due to the uncertainty and individual characteristics that define underground mining projects, each will exhibit its own individual risk profile, and thus more advanced evaluation techniques are required to capture this information in the underground mining context.

This thesis develops a Risk-based Evaluation Methodology that recognizes both financial and technical scheduling risk within the valuation of underground mining projects. Its use provides decision-makers with more information early in the mine planning cycle by investigating the combination of planning and design methodologies with evaluation techniques to identify, optimize and evaluate strategies for mining extraction sequences.

This methodology differs from other evaluation techniques in that it combines the standard evaluation practices used in the mining industry (Discounted Cash Flow, Real Options, Monte Carlo Simulation, etc.) with the concepts of Modern Portfolio Theory to establish an evaluation methodology that recognizes financial uncertainty in the context of technical scheduling factors. Through study applications in this thesis to demonstrate the use of the methodology, it is shown that the inclusion of more information in the decision-making process can not only provide a more accurate valuation and allow for the recognition of risk, but can also alter the ultimate decision that is made, as the true characteristics of a project (and strategy) are often not recognized when using a typical discounted cash flow evaluation technique.