During the design of a new production facility for a greenfields or significant brownfields expansion many design decisions are made driven by an unquestioning objective to achieve 'lowest cash-cost' production costs. In many cases this translates to a design and operating philosophy based on largest-available, single-line equipment. Although acknowledged as an approach that is efficient from an operating cost perspective does this approach always maximise shareholder value? There is an increasing awareness in the mining industry of the value of project flexibility, robustness and value options. The design of a new production facility creates a window of opportunity which should be structured to ensure that project value options and robustness are understood and exploited. This requires the use of emerging valuation methodologies, such as Value-at-Risk and Real Options, as well as tried and trusted NPV/IRR approaches._x000D_
The paper provides an overview of the basis and application of these less well known techniques in the context of metallurgical plant design. Design guidelines that demonstrate how value options and flexibility can be quantified from both a risk and value perspective are presented. Issues such as use of single versus multiple line equipment, optimum cut-off grade and improved exploitation of the inherent variability of the orebody are also examined._x000D_
Finally the management issues and approaches to achieving this will be briefly discussed; for example it is common during project development to drive towards increasing certainty as rapidly as possible to facilitate 'accurate' estimation of costs. Understanding and exploiting value options requires a project culture that tolerates, and revels in, ambiguity and uncertainty - something that would make many project teams uncomfortable! FORMAL CITATION:Stange, W and Cooper, B, 2008. Value options and flexibility in plant design, in Proceedings MetPlant 2008, pp 207-222 (The Australasian Institute of Mining and Metallurgy: Melbourne).