Real Option Model Application and Sensitivity Analysis in Mineral Resources Investment Project

This paper describes the emergence of real option and its development process. Real option introduces uncertainties into the establishment of the evaluation model in line with the actual investment situations, improving the flexibility of project investment decision-making as well, which provides a broad space in the field of the project investment analysis and evaluation. Mineral resources investment project is applied and the application of real option model is intensively discussed. It is believed that the real option model can better simulate the investment environment uncertainty in mineral resources exploration and development, and the premium due to the flexible investment process is quantized so as to maximum success rate of the decision-making and management. A case study is provided to prove its effectiveness and sensitivity analysis is discussed to guide the investment project.