Option premiums in mineral asset pricing: are they important?

A review of attempts to empirically quantify the “option premium” associated with optimal mineral asset management. The option premium appears to explain at most half of the observed gap between the discounted cash flow value and the market value of mineral assets, and it adds 3 percent at most to...

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Bibliographic Details
Published in:Land Economics Vol. 72; pp. 167 - 187
Main Author: Davis, Graham A.
Format: Article
Published: University of Wisconsin Press May 1996
Subjects:
Online Access:View this record in EBSCOhost
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        atl: Option premiums in mineral asset pricing: are they important?
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        au: Davis, Graham A.
      su:
        Mathematical models
        Mines & mineral resources
        Resource exploitation
        Valuation of real property
        Option value
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        subj:
          Mathematical models
          Mines & mineral resources
          Resource exploitation
          Valuation of real property
          Option value
      ab: A review of attempts to empirically quantify the “option premium” associated with optimal mineral asset management. The option premium appears to explain at most half of the observed gap between the discounted cash flow value and the market value of mineral assets, and it adds 3 percent at most to the gross worth of a mineral asset. Asset management option premiums thus have only a second-order effect on mineral asset pricing.
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    language: English
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