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| Capital Optimisation – African Underground Mine |
Context / Scope of project
A large, undeveloped base metal deposit in Africa had gone through an extended assessment phase, including a pre-feasibility study and two rounds of optimizations and was in a full feasibility stage. The project team’s approach had been impressively rigorous, but scarce capital and a low price outlook made NPV challenging. Despite being a very attractive asset, the project had been in re-evaluation for more than two years - trying to produce a NPV that met the owner’s internal target rate of return. The owner wanted to proceed, but country risks required a low up-front capital investment and a strong NPV to proceed.
Client achieved:
In 4 weeks-
- Increased the potential project NPV by roughly 500% through mine plan reassessment, opex and capex reductions, finance refinement and improved procurement processes
- Increased the maximum potential annual output from the mine by 50% through benchmarked improvement ideas and a tactical reassessment of the mine plan
- Reduced the ramp-up time to peak production by 50% through a more aggressive mine plan and improved operating efficiency
- Identified potential phasing for capital spending which could retain the option value of a higher peak production rate while lowering the up-front capital requirements
- Confirmed the validity of all major project team assumptions and methodologies through benchmarking, cross-check analysis and use of value driver trees
- Outlined a clear, structured path forward for the remainder of the feasibility study process in order for the project team to deliver a robust recommendation focused on the highest value areas
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What we did:
- Identified the major areas of potential opportunity and pressure tested the project team’s assumptions and methodology in each
- Developed value driver trees to identify and quantify underlying assumptions in key operational areas, ensuring the team was focused on the highest value levers and was using assumptions that met relevant national and global benchmarks
- Conducted extensive interviews with all key project team members and all major contractors to benchmark assumptions and methodology
- Created detailed paretos for three key operational phases – pre-production development, ramp-up and peak production – to capture and quantify the impact and costs of all key constraints on production
- Developed detailed analyses with relevant national, continental and global benchmarks for certain key operational and cost categories (e.g. logistics) and risks (e.g. electricity supply)
- Clarified and detailed the highest value outstanding issues and questions that are ‘make or break’ for the project as it moves through the balance of the feasibility process
- Refreshed important financial, operating cost and capex assumptions to reflect the same ‘new world’ that had also resulted in a reduced price outlook
- Created a project timeline and suggested review structure to ensure that the team’s efforts remained on track and focused on the key value levers
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