Keywords: project cost of capital, discount rate, mining project evaluation, mineral projects, mining projects
Estimating the discount rate for projects of a mining complex
The literature on mineral project evaluations does not deal specifically with the calculation of project cost of capital as discount rate. Most texts focus on the calculation of the corporate cost of capital. However, a project's cost of capital is generally different from the corporate cost of capital. The proposed method solves this problem by applying two adjustments that consider the stage and category of a mining project. Using this methodology, the cost of capital for projects Nos. 1-4 of Gol-E-Gohar Iron Ore Mining Complex are estimated 43%, 45%, 42% and 48%, respectively.