In any mining project, specially when the ore reserve is relatively large and distributed inhomogeneously, drilling new boreholes to reduce the uncertainty associated with the grade estimation as well as reserve classification becomes unavoidable. However, selecting the optimum location of the new borehole, in terms of providing the maximum amount of information possible is a challenge. In this regard, customarily, the geostatistical approaches, based on minimizing the estimation error (variance) of blocks grade is used. However, in this method, the estimation variance of each block is independent of the sample grade values and only takes into account the spatial distribution of sample’s location. This will ignore the local variability of sample values. Another approach to determine the optimum location for the new drilling boreholes could be based on the geostatistical simulation techniques. In simulation methods, the spatial variability due to the sample location, as well as the local variability associated with the data values are taken into consideration. In this paper, the Fractal Conditional Simulation Method (FCSM) is used to simulate the iron grades of anomaly No.3 of Gol-E-Gohar iron ore mine. The simulated data, then, were used to estimate the iron ore reserve and to perform a risk analysis. This method simulates the data sets, while the fractal co-dimension as well as the statistical and geostatistical parameters are kept unchanged. Finally, using uncertainty index and GET (Grade, Error and Thickness) function, the optimum location for new boreholes in the northern part of the ore-body was suggested.