The Feasibility Study of A8 Pit Project in PT XYZ
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PT XYZ, a coal mining company in East Kalimantan, faces a strategic decision regarding the development of Pit A8, a boundary area adjacent to PT MAG’s concession. This study aimed to evaluate the financial feasibility of three operational alternatives: full joint operation, self-managed mining, and joint operation with independent coal marketing. The analysis employed Discounted Cash Flow (DCF) methods, including Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period (PBP), complemented by sensitivity analysis and Monte Carlo simulation to assess project uncertainty. The results indicated that all alternatives were financially feasible, as reflected by positive NPV values and IRRs exceeding the required rate of return. Among the alternatives, the joint operation with independent marketing demonstrated the highest financial performance, achieving an NPV of USD 209.52 million, an IRR of 438%, and a payback period of 0.59 years. Sensitivity analysis identified coal price and gross calorific value (GCV) as the most significant value drivers, while Monte Carlo simulation with 10,000 iterations produced an expected NPV of USD 248.62 million with a positively skewed distribution, indicating greater upside potential despite existing downside risks. The findings suggested that a hybrid joint operation model provided the optimal balance between operational efficiency and value creation. To ensure project sustainability, risk mitigation strategies, including price hedging, cost control, and integrated mine planning, are essential.
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