Citation:

Khamidah, Halumi Nur, Darmansyah, Asep. "Financial Analysis of Ventilation Infrastructure Development Using Discounted Cash Flow – Based: Evidence from the CGSS-CGHT Underground Gold Mine" International Research Journal of Economics and Management Studies, Vol. 4, No. 12, pp. 80-86, 2025. Crossref. http://doi.org/10.56472/25835238/IRJEMS-V4I12P110

Abstract:

This paper a feasibility study on the development of new ventilation infrastructure in the CGSS- CGHT section of an underground gold mine. Two alternative production scenarios are evaluated: scenario 1, where the mine continues to operate without a new ventilation shaft, and scenario 2, where a new shaft is constructed to access deeper ore. The analysis combines a strategic business assessment – using PESTLE, VRIO, and SWOT frameworks – with a discounted cash flow (DFC) valuation for each scenario. Project performance is measured using net present value (NPV), internal rate of return (IRR), and payback period, with cash flows discounted at the project’s weighted average cost of capital. Sensitivity tests are carried out on gold price and operating costs to evaluate robustness. The results show that both scenarios are financially feasible. However, scenario 2 consistently generates higher value, with an NPV of USD 74.05 million compared to USD 66.77 million foe scenario 1, an IRR of 47% versus 44%, and a similarly short payback periode of less than one year. Scenario 2 also delivers lower until costs (COGS and OPE per ounce) and higher cumulative royalty payments to the government. Beyond the financial indicators, the new ventilation shaft in technically justified as it enables safer access to deeper reserves and supports more reliable operations. The study concludes that scenario 2 is the most appropriate strategy to maximize the remaining gold reserve value, enhance shareholder wealth, and maintain safety and regulatory compliance. A phased implementation roadmap is proposed to support execution with minimal disruption to ongoing operation.

References:

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Keywords:

DCF, Gold Mine, Feasibility Study, Underground, Ventilation.