While it has completed nine projects across various commodities this year, most have been in the gold sector, says Gauteng-based mining consultancy A & B Global Mining (ABGM).
This trend has continued, with three of the seven projects across Africa for which the company is finalising commercial arrangements also being in the gold mining sector.
“Gold has historically been a secure investment during global geopolitical and economic uncertainties and, since the decline of the US dollar against other currencies in 2008, even more investors have opted for the security of gold. The price of gold has steadily stayed above the $1 000/oz mark for the past eight years. This in general proves a strong business case for most gold mining operations. This could potentially be the reason for the mining companies seeking investment in this stable and secure metal,” says ABGM South Africa operations manager Ettienne Oosthuizen.
He adds that gold demand and price is expected to increase owing to the increased wealth of emerging markets/economies, the decline in global production from producing mines since about 2000, and the increased interest among investors.
The gold projects, on which ABGM expects to start work soon, involve three brownfield gold mines – two in South Africa and one in Ghana.
The first of the South African gold projects involves completing an operational and business plan for an underground gold mine by March 2019 for production ramp up and the associated funding decision. The second project in the country entails resource and reserve life-of-mine (LoM) planning at an openpit gold mine for public reporting and yearly budget approval purposes. The LoM planning is expected to start in January 2019 and should be completed by April 2019. The project in Ghana comprises an updated LoM plan for the reopening of an underground mine, which the company aims to complete in December.
ABGM is also involved in an ongoing planning contract for an underground gold mine in Ghana. The company is undertaking operational readiness and LoM planning work for the mine to increase confidence in its mine plan for operational execution. Having started this project in October this year, it should be finalised in December.
Demand for ABGM’s services has also come from the base metals and coal sectors, with the company attributing the increase in work in these sectors to the favourable base metal and coal prices.
In terms of base metals, the latest project to be finalised by ABGM involved a due diligence report, completed last month, to determine a funding decision for a copper mine in Zambia. The company is also undertaking a definitive feasibility study for an underground project in South Africa, which not only hosts copper deposits but also zinc, gold and silver.
Other ongoing work in the sector comprises two lead/zinc projects, also in South Africa, encompassing LoM planning and cost modelling for funding decisions.
In the coal sector, ABGM completed a scoping study in March for investment funding of a South African openpit operation and expects to start a project feasibility update and operational planning for the redevelopment of a local underground coal operation in December.
Further opportunities in South Africa are in chrome, with a scoping study for a project feasibility assessment of an openpit mine starting this month. Completion of the project is scheduled for April 2019. ABGM has also taken on LoM planning for an openpit platinum group metals project to determine operational execution planning and budgeting. This project should be finalised by January next year after work started in October 2018.
Outside Africa, the company has found opportunities in Asia, undertaking a bankable feasibility study (BFS) for an underground chrome project in India, where it completed a prefeasibility study for an openpit phosphate mine in August. The company expects to complete the BFS in March next year.
All the deadlines for projects completed by the company this year where met when the original scope remained unchanged, but where there were scope changes, new deadlines were agreed on and achieved.
“All projects have challenges or else we would be out of the business. Our skill set is to provide specialised solutions to these challenges,” states ABGM South Africa MD Devendra Vyas.
Generally, the mining industry presents technical, financial and commercial, and project management issues.
Technical challenges comprise overcoming environmental, logistical, qualitative and quantitative challenges. Just one of these aspects could sink a project and this is determined on a project-by-project basis.
Each project also has financial and commercial aspects that need to be considered “This requires trade-offs to be undertaken to enable the client to make the best decision,” notes Vyas. Some of the typical trade-offs comprise underground mine access; equipment type and size and so forth; logistical options such as trucking, conveying and piping; variations in overall pit slope angles (steeper versus shallower); the mining extraction sequence; capital investment options; production levels; and mining infrastructure positioning.
The company notes that trade-off requirements have expanded into each work package, such as geology, geotechnical engineering and mining engineering, and each stage of project development. This results in a longer project timeline and increased cost.
Subsequently, there are more questions being asked by senior managers and directors during the presentation of project outcomes prior to approval to identify the best business case for projects.
To avoid challenges relating to project management, Oosthuizen says it is vital that the scope of all projects is detailed, and all relevant work packages are signed off, as this can result in failure to meet deadlines. “Once a detailed scope definition is developed and signed off, it is also critical to employ the correct people skills to deliver the project in a timely manner. This is always a challenge which is overcome by networking.”
Projects come in various sizes and involve differing disciplines, notes Vyas. Therefore, mining consultants need to possess industrywide experience and flexibility within their portfolio relying on a network of specialists when reviewing the needs of projects and delivering the desired outcomes.