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CRU STRATEGIES
http://www.crustrategies.com
31 Mount Pleasant, London WC1X 0AD UK Tel. +44 20 7278 7788 Fax +44 20 7278 0003
PO Box 1269, Langley, WA 98260 USATel. +1 360 321 4707 Fax +1 360 3214709
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LONDON | SEATTLE | PHILADELPHIA | BEIJING | SYDNEY | SANTIAGO | RIO DE JANEIRO
Performance Improvement at Both Ends of the Cycle
“Making the good times better..” or “just surviving..!”
IMinSouthDecember 12th 2006
Phil Newman, CRU Strategies
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Performance Improvement
• Technical innovation
• New ways to report, measure and improve your business
Where have I come from?
• 1990-2006 : Engineering, mining waste management, recognised expert in paste technology, dealing with slurry handling issues and, in particular novel dewatering methods
• 2006 onwards : Strategy development; project management, modelling of mining from the stope to the boardroom.
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CRU STRATEGIES
“…the tailings pond is filling up, we have no money to build another but we must increase production to make a profit…
“..just surviving..”Do you remember 2002?
Zinc at $779/t
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• What is it and how does it work?
• Dewatering Applications
• Case Studies – successes AND failures!!!
• The Mechanism of GAD
Geotextile-assisted dewatering (GAD)
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Geotextile Tubes / Bags
• Developed in the 1970’s to aid construction of coastal structures using pumped sand
• Discovered that silts were also trapped
• Dredging solutions developed, dealing with high fines content materials
• Innovative applications in the USA to tannery waste, ketchup waste, paper sludge
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The Mechanism of GAD
• Dewatering is not immediate
• Internal filter cake developed (fragile)
• Pumping rate has significant effect– Pumping Factor (PF) = Q/V
– PF << 0.4 for efficient dewatering
• Empirical observations only
• Research is required
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Case Studies
• The proof of the pudding….– Mineral slurries: where I first tried it!
– Topsoil slurry: potential but we needed flocculant and the client resisted
– Bentonite slurry: trials went ok but we needed to be more aggressive on flocculant (stories of skullduggery!!)
– Ochre: worked well in trials
– Contaminated silt: I was nervous, client saw potential and it worked!
– In-situ dam building: it works, but H&S issues need to be overcome
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Lead-zinc mine located in northeastern Greece,~ 450,000 tpa ROM ore
Case Study – Mineral Tailings
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The Stratoni Challenge
• Chevalier pond system designed for ~240,000 tpa• Insufficient capacity for increased production
• Coarse tailings from Karakoli can be placed underground to make space for dried fines
• Chevalier ponds require emptying but natural drying takes six months!
• How can we speed up production of dried fines?
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Possible Solutions..
• Geotextile dewatering?
• Mechanical filtration plant?
• Expand tailings facility? …. >$3 million capex…. minimal opex
…. >$1 million capex….. high opex
…. negligible capex…. high opex
Mine needed a minimal capex solution but wouldgeotextile assisted dewatering work?
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Phased Approach - Hanging Bag Trials
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Phased Approach - Tube Trials
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Phased Approach – Tube Trials
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Tube Trials - Results
23.600.060.030Tube runoff, day 5
32.800.080.028Tube runoff, day 1
53.330.330.231Chevalier Pond #1, re-circulation to mill (2002 average)
TSS (mg/l)
Zn (ppm)Pb(ppm)
Sample
Input Solids - ~7wt% solids with 90% < 44 micronsFiltrate - minimal solids (20-30 ppm)Final solids % in tube - 55–60 wt% solids
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Repair / De-construction
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Implementation
• Day shift operation only• Steel manifold system with manual control allows daily
filling of 40m long tubes• Alternative fabrics were investigated (to reduce cost)
and flocculants to increase effective dewatering rate were under consideration
MINE SUSPENDED - 2003
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Root vegetable processing / apple processing
Case Study – Topsoil Slurry
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Waste bentonite slurry from piling on CTRL
Case Study – Bentonite Slurry
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Effluent slurry from parts manufacturer, high metal content.
Two-week summer shutdown required for removal of slimes build-up.
Case Study – Metal-rich Slurry
Transport reduction:- one sludge tanker per week- 3 or 4 trucks per year!
Recycling facilitation- approx. 3 tons of Ni now
re-cycled to plant
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Coal Authority minewater treatment system
Case Study – Ochre
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CRU STRATEGIES
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Drainage ditch on industrial estate – “.. ‘orrible stuff”
Case Study – Contaminated Silt
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Can we build in-situ berms using waste products?Yes we can….. but be careful!
Case Study – In-situ berms
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Filled Tube
First tube near full. Note seepage runoff on right side of tube
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Summary
• Geotextile dewatering can work VERY well• Implementation is simple• Opportunities exist for further improvements
in dewatering rate and efficiency
• We have under-estimated the importance of flocculant
• Research is essential and can reduce the empirical approach (makes some clients nervous!)
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CRU STRATEGIES
“We have money to invest, lots of money actually, what should we do to optimise our operation?”
“Making the good times better..”
Zn at $4474/tCu at $6818/t
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Optimisation…
• Optimisation is a process, it’s about maximising something…
• What is it you want to maximise? …… NPV? Profit? Productivity? Mine life?
• Do you actually know?
• How will it influence your strategy and what if….?
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Lets start with the mine(s)….
• Target a mine plan that increases development (investment) and exploration to develop more reserves and lengthen mine life...
• Mine plan looks good, economic model built on top : delivers profit with 40% chance to double reserves
• Then, opportunity with third party arises for investment in new mine which delivers 90% chance to double reserves but requires cash….
• What if we abandon development and chase this opportunity; what are the risks?
• Oh, forgot to mention, the third party needs to know the day after tomorrow!
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What is an integrated mine model?…Mine End
Stope R14DimensionsGradeSGDistance to crusher
Geological ModelGemcomSurpac
DatamineWhittle (OP)
Drainage RulesVentilation Rules
Blasting andMucking Rules
R14
FORECASTProduction Rate
ManpowerConsumables
R10
R4
R11R16
R8
R22
R- Orebody ForecastProduction Rate
ManpowerConsumables
COSTPROFIT etc..
Mine PlanProduction Rate
ManpowerConsumables
COSTPROFIT etc..
S-Orebody
V-Orebody
X-Orebody
Transactional Model(e.g. SAP)
Site CostsConcentrator
Environmental
Transportation
INPUT TO GROUP
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What is an integrated mine model?… Corporate End
Mine A PlanProduction Rate
ManpowerConsumables
COSTPROFIT etc..
Mine B Plan
Mine C Plan
New acquisition?
FROM MINE A
GROUPProduction Rate
ManpowerConsumables
COSTPROFIT etc..
Corporate Costs
Projects
Global AssumptionsWACC
Interest RateInflation
Metal PriceWhat if…. (b)
What if….. (a)
..back to mine AND down to STOPES
ANSWER!
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New acquisition?
Global AssumptionsWACC
Interest RateInflation
Metal Price
Mine A PlanProduction Rate
ManpowerConsumables
COSTPROFIT etc..
Mine B Plan
Mine C Plan
FROM MINE A
GROUPProduction Rate
ManpowerConsumables
COSTPROFIT etc..
Corporate Costs
Projects
What if…. (b)
What if….. (a)
REPORTINGANALYSISDECISIONS
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Some Conventional ReportingFormats
Value Measures
Revenue Measures Cost Measures Capital Measures
Operational Measures
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22 33 44
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Kloof Base Case - Components of Value
0
5,000
10,000
15,000
20,000
25,000
30,000
Revenue Total Cost Total Capex Tax Value
Ran
ds (M
illio
ns)
Kloof Base Case - LoM RoM Tons
0
1,000
2,000
3,000
4,000
5,000
6,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Years
Tons
(Th
ousa
nds
)
1SUB 2SUB 3# 4# 7# 8# Dump
Snapshot AnalysisAnalysis Over Time Project Ranking
-1,000
-500
0
500
1,000
1,500
2,000
Pro
ject
1
Pro
ject
2
Pro
ject
3
Pro
ject
4
Pro
ject
5
Pro
ject
6
Pro
ject
7
Pro
ject
8
Pro
ject
9
Pro
ject
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Pro
ject
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Pro
ject
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Pro
ject
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Pro
ject
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Pro
ject
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Project
NPV
(Ran
ds M
illio
ns)
Ranking AnalysisHow we look at it…
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From Reporting to Diagnostics – Understanding Causality
Understanding the difference between two metrics For example – Actual vs. Budget; or Last Year vs. This year etc.
Or Scenario 1 vs. Scenario 2.
Understanding the difference between two metrics For example – Actual vs. Budget; or Last Year vs. This year etc.
Or Scenario 1 vs. Scenario 2.
Metric OneMetric One
Metric TwoMetric Two
Reason for DifferenceReason for Difference
By stope, or by mine, or by day, or by any combination of theseBy stope, or by mine, or by day, or by any combination of these
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Multi-Dimensional Analysis
NPV ($)
Cut-off Grade
Mining Rate ChangeIncreasing the cut-off grade has the
impact of raising margins through the increased gold production. But this will result in reduced life.
Increasing the cut-off grade has the impact of raising margins through the increased gold production. But this will result in reduced life.
Increasing volume has the impact of reducing the fixed costs resulting in lowering the cut-off grade. This will also increase the reserve life
Increasing volume has the impact of reducing the fixed costs resulting in lowering the cut-off grade. This will also increase the reserve life
The optimal cut-off grade / Volume tradeoff for maximizing NPV per mine unit
The optimal cut-off grade / Volume tradeoff for maximizing NPV per mine unit
Current status of the operationCurrent status of the operation
34Note:Source:
Diagnostic Reporting Engine DevelopedEspecially for Mining
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Seeing The Enterprise as an “Economic System”
System Implies — A Set of Interacting Variables
Economic Implies — Monetary Variables
The purpose is about alignment to a single objective
From A Reporting Hierarchy to a Model – “Just Add rules”
ProfitProfitProfit
RevenueRevenueRevenue CostCostCost
Sales VolumeSales Sales
VolumeVolume PricePricePrice VariableVariableVariableFixedFixedFixed
TonnageTonnageTonnage LocationLocationLocation ReefReefReef
VolumesVolumesVolumes
DepthDepthDepth
The Objective Function
= Driver
= Operational Metrics
= Economic Metrics
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Phew!!! – Sorry about that explosion of colour…
• Object based modelling can allow powerful models to be built that are limited by only imagination (and budget!) ☺
• CRU has a long history of building economic models on which industry can rely
• The advent of Carbon-L can now allow bespoke models to provide executives with the information and analytical power to make decisions, in a fraction of the time compared to current standards
• Finally, it is simple (believe me, if I can do it, so can you!)
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THANK-YOU!Phil NewmanPrincipal ConsultantCRU StrategiesTel: +44 20 7903 2105Mob: +44 7894 264 [email protected]