Potential uranium supply system based upon computer simulation of sequential exploration and decisions under risk.

Abstract

One of the more elusive problems in the area of mineral resource assessment is the comprehensive description of potential supply from undiscovered deposits, especially for economic conditions outside of historical experience. This dissertation consists of the design of a Monte Carlo simulation system to estimate potential supply of roll-type deposits. The system takes a given uranium endowment probability distribution and aims at two major and interrelated objectives. First, to design a system that estimates potential supply even when prices are much higher than previous or current prices. Second, to account fully for the cost of discovering and mining the individual mineral deposits contained in given endowment. Achievement of these objectives constitutes the major contribution of this study. To accomplish them, the system considers: cost of risk, return on investment, cost of failures during the search process, discovery depletion, and effect of physical characteristics of the deposits on exploration and mining costs. It also considers that when economic conditions, such as product price, are outside historical experience, existing behavioral rules--exploration drilling density, stopping rules, minimum attractive deposit size and grade, and mining parameters--are irrelevant. Instead, those decision rules are determined internally by the system. The system design task--particularly the exploration model--is greatly compounded by these objectives. As far as can be determined from models reported in published papers, the exploration model of this dissertation is unique in several ways. It is the most disaggregated sequential model designed to date. It is the first one that models geologic features that are used as exploration guides, and the only one that separates the physical elements of the search process from the economic elements and links the two to decide the optimal activity level at every exploration stage. Although the system is designed for a specific mineral and mode of occurrence, the system architecture is general and can be used with an exploration model prepared specifically for other minerals.