Achieving successful Mining Project outcomes

There are a number of problems that executives commonly run into over the course of a project that are responsible for delays and additional expenses. These include:

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·?????? Inadequate primary geological, mine planning and metallurgical test work

·?????? Lack of experience in project development

·?????? Rushed development due to lack of funds

·?????? Inadequate standards in feasibility studies

·?????? Unrealistic economic assumptions

·?????? Failure to conduct peer reviews

·?????? Cost estimates which don’t recognise variances

·?????? Industry sub-standard project scheduling and control

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Optimising and creating strategic asset value in a mining company goes through many stages, beginning with the definition of ore resources and ending with the production of a commodity.

Each stage requires specific experience and skill sets and is technically complex. In order to achieve optimal results, the process of value creation invariably requires adjustments to be made at each stage. Figure 2. Illustrates this in block diagram form.

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I would welcome having an informal discussion with you for you to consider taking steps to resolve challenges most mining executives face.

Capital, time, cash flow, and commodity prices all play key roles in achieving the objectives of the investors and shareholders. However, mining companies frequently oversimplify these challenges because they have not fully grasped the complexities of the issues.?

My roles in the Australian Mining Industry span over 30 years and cover operations, project management, design, construction, and development, at managing director, CEO, general manager, project manager and business manager levels.

Since leaving permanent roles with both the Metso Group (annual turnover Euro 3.2 billion), where I was the Australian managing director, and Sedgman (part of the CIMIC Group (annual turnover $10.9 billion)), where I was executive general manager, I have worked as a project manager/director and owners’ representative for a number of clients, small and large, including Worley Parsons (ASX:WOR, group turnover $4.7 billion), United Minerals, Sundance Resources and Sinosteel. I have also provided strategic advice and reviews of projects and contracts for clients such as Monadelphous (ASX:MND, market cap $29 billion).

I have conducted organisational reviews for companies such as Newcrest (ASX:NCM, market cap $29 billion)

As an advisor to senior executives in the mining industry, I have a clear understanding of how to initiate, manage and bring to successful completion a wide variety of mining projects, from concept and exploration through to full operation.

My experience includes projects in Europe, Africa, and South East Asia, and covers precious metals, iron ore, mineral sands, and polymetallic projects at all stages of development. (The above picture shows me with an 800-ounce gold doré worth around $1.6 million.)

I have worked on projects which require investment of anywhere from $100 million to $6 billion. There will always be a timeframe in which investors want their principal investment returned, and if you cannot show them that you are able to deliver, then your project is never going to get off the drawing board.

Costs can spiral out of control quickly on a mining project, as you do your best to achieve outcomes, and yet you can still lack the tools that you need to get the results you and your investors require.

A quality project must begin with quality assumptions! The ratio of projects that only reach the investment stage to the projects that reach completion is around 3:1, so it’s critical to get started on the right foot.

By ensuring executives have the right organisational structure, systems, processes, and project management in place to maximise the success of their projects, organisations can create high levels of value. By getting it right during the early stages, you diminish the risk of the project ending up below the aspirations of the company.

I offer a proven methodology that will put you on a path of optimising and creating strategic asset value from greenfield and brownfield projects, as well as from existing operations.

These proven methodologies apply equally to situations where you know there are problems, challenges, and issues which need to be addressed sooner rather than later.

Through working with senior executives and their teams, as well as with appointed contractors and consultants, I am able to provide a range of services, including:

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??????? Executive? advisory services

??????? Reviewing data and reports

??????? Representing company owners

??????? Participating in management processes

??????? Conducting interviews

??????? Preparing reports

??????? Preparing strategy discussion papers

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Australia’s mining industry has a large and enviable talent pool, comprised of experienced professionals and consultants in almost every discipline required, many of whom are considered experts in their respective area.

I know many of them and admire their dedication, service and track record in the industry. However, many of these experienced professionals specialise in a relatively narrow area, and so putting together a team made up of these individuals is often time-consuming and, unless managed tightly, can be costly.

Equally, engineering services companies are not able to offer a comprehensive range of executive services, simply because there are not enough chargeable man-hours in it for them.?

For the most part, these companies do a great job in preparing deliverables such as scoping studies, feasibility studies, engineering design and, of course, favour the EPCM contract for managing the process through to commissioning. These studies create estimates of the costs over time and percentage physical completion, that will be involved in delivery the project. However, these cost curves will only ever be as good as the quality of your assumptions.

It’s not so much a question of ‘garbage in, garbage out,’ but you really do need to ensure that you are using good-quality inputs if you want to have a great end result.

I have also seen situations where big name consulting and accounting firms have brought in teams of people to work on projects, charging significant fees to the organisation. However, the experience level of the people that they have brought in has not come close to justifying the cost or the value of the output.

To find out how I can help your organisation, drop me a line or call. I am based in Perth, Western Australia.

Sten Soderstrom (FAICD, FEngAus, CPEng, MAusIMM)

DIR ID 036 62566 41832 63

[email protected]

0418918310