Investment Project Analysis Pit CACD Block 8 Using Discounted Cash Flow (DCF): A Case Study of Pt. Berau Coal

PT Berau Coal which is located in Berau Regency, East Kalimantan Province. Pit C2 Block 8 Binungan Mining Operation Area 2 PT Berau Coal is a coal mining operation area with multi-seam characteristics with a slope of coal seams at intervals of 40 – 60 degrees. The characteristics of coal deposits are one of the considerations in the formation of coal mining designs in collaboration with other disciplines, including geotechnical, hydrology, safety and environment, as well as other aspects. PT Berau Coal faces several challenges, risks and uncertainties such as fluctuations in coal prices, production capacity, mining costs and related legal aspects. Therefore, mining planning and strategy must be carried out carefully until PT Berau Coal's mining permit expires in 2025. Financial assessment must accommodate the risks and uncertainties that exist to overcome the weaknesses of the DCF method. The monte carlo symulation method serves as an alternative for creating dynamic quantitative models for mining projects. In this method, the discounted risk factor is applied directly to variables of uncertain sources, such as coal prices, to improve accuracy. Therefore, evaluating long-term mine planning at PT Berau Coal using scenario analysis and Monte Carlo simulation is useful for making better decisions in production, investment and resource allocation schemes. With the results of a financial evaluation of NPV DCF 38mio USD, NPV Monte Carlo 40mio USD, IRR 51%, PI 4.12, and PBP 2.28 years PT Berau Coal will consider and make a decision whether to continue the project considering several risks or cancel the investment and not continue mining in Pit CACD.