The application of a real options valuation methodology to a coal mining project in New South Wales, Australia

This study uses a real options approach to value an operating coal mine in the Hunter Valley, New South Wales, Australia. It then compares the results with a traditional discounted cash flow (DCF) analysis, finding that not only is the methodology presented viable, but the relative simplicity of its implementation using binomial lattices makes it a realistic and feasible alternative to traditional DCF analysis.