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Value Tracking Symposium
Symposium identifies a need for best practice in 'tracking value'
Having an agreed approach to the measurement of value across all aspects of a mining and processing operation emerged as a major imperative from the recent Value Tracking Symposium, held in Brisbane. While delegates were presented with wide ranging views about exactly what is meant by the term 'value' in a mining operation, there was general consensus that tracking the value of a resource as it transforms from the ground into saleable product was vital but not straight-forward.
The symposium covered a wide range of issues associated with the definition of the resource and sampling of process streams that are conventionally associated with understanding mining efficiency. However, not everyone was convinced that these activities adequately described the value being added at an operational level nor that they respond to corporate reporting needs in a timely fashion.
These issues came into sharp focus with a question posed at the workshop on Day 2 by Newmont's Batu Hijau Process Analytical Services superintendent Karen McCaffery who asked how the value of better measurement could be assessed in monetary terms. "It's the cost to your day to day operation and putting a dollar value on it that I'm trying to get a handle on," Karen said. She said she needed to convince management of the need to invest money in a good plant sampling system to provide better reconciliation. "If I can't put a dollar value to it (sampling) why is it actually important to do it at all?"
Robin Polson of PricewaterhouseCoopers said that in his view there was a lot of talk about value at the Symposium, in terms of individual processes within an operation. He argued that the important point to understand was that value has to be looked at in a holistic way. "It's very difficult to justify a project on a stand alone basis, as often you are selling it in competition with a lot of other projects. "The important thing is to have an economic model that covers the whole of the operation because that's what it is all about maximising the whole value, whatever that value is, of the operation."
Robin said an organisation as a whole needed to decide on the key value drivers, such as ore grade, blending options, capacity through the plant, and so forth. "Having an understanding of the sensitivity of those issues makes it a lot easier to decide whether it is economically beneficial to for example implement an enhanced drilling program to improve grades." He said having this enhanced level of understanding on such issues as movement in grade had a bearing on the value of an organisation. "It is very hard at an operational level to be able to interpret value without an understanding of its impact on the organisation as a whole."
An emerging opportunity to establish best practice in a standardised way across the industry was presented by Symposium co-chairman Dr Rob Morrison and AMIRA research coordinator Richard Beck with the new P754 metallurgical accounting project. The JKMRC-AMIRA project aims to look at the possibility of developing guidelines similar to the JORC Code from mine face to final metal. "Forecasting in the metal accounting process is relatively imprecise, especially when compared to similar procedures in other industries," Richard Beck said.
The project outcomes would enable sponsoring companies to improve the credibility and transparency of metal accounting and the reconciliation reporting process. "The benefits of this project will be to reduce corporate governance concerns and use metal accounting to identify opportunities to improve operational efficiencies and profitability of operations." Richard said AMIRA P754 would build on existing measurement technology to 'attack the problems' with current metal accounting and reconciliation practices in the minerals industry.
The JKMRC-AMIRA metal accounting project was one of a number of practical initiatives presented to Symposium delegates as a potential approach to providing industry with real benefits in terms of tracking the value of mineral industry resources.
Other symposium highlights included a presentation by Competitive Dynamics Pty Ltd senior consultant Peter Slaughter on the relevance of good corporate governance to maximising shareholder wealth in mineral commodity companies, MIM project geologist Chris Huddy's paper on grade control at Mount Isa, and Golder Associates principal consultant Bill Shaw's thought provoking 'beyond grade control', which looked at the broken links in the chain of value.
A range of case studies were presented among several papers on sampling, including a presentation from the director of Mineman Systems, Omar Sehic, on the systematic analysis of error as a means of improving materials accounting and production control in mining.
Taking a holistic approach to the theme was Newcrest's Andrew Logan whose paper looked at leading measures to deliver shareholder value at Ridgeway gold mine.
A total of 27 papers were presented over the two-day event, which included two late afternoon workshops. Each of the workshops was well attended, and to the delight of the symposium organisers almost all of the delegates stayed until the very end of the workshop late on the second day. At one stage close to 100 people had packed the venue during these sessions.
Where to now?
The principal of Hackchester Pty Ltd, Peter Stoker a fellow of the AusIMM and secretary of the Joint Ore Reserves Committee presented the history and development of the JORC and VALMIN codes and reporting standards and its application to value tracking. His presentation provided the relevant industry context in which to place any future direction for codification or establishing uniform best practice principles for value tracking.
"The first thing you have to do is make sure you have the stakeholders on side, particularly financial people, because they're interested in what the outcome of all the activity is," Peter said. "All stakeholders must see the need for and the benefit of the guideline or code, and be involved in its development."
However, Peter said he preferred to see the development of guidelines rather than codes, particularly prior to general acceptance. "There's nothing worse than trying to shove something down somebody's throat and there can never be enough consultation."
If anyone is interested in getting involved in forming a steering committee or working party on Value Tracking, contact David Goeldner at the AusIMM Southern Queensland Branch on 07 3365 5848 or email firstname.lastname@example.org.
The organisers would also like to thank the Symposium's sponsors Golder Associates, Mineman Systems, ThermoGamma-Metrics and JKTech.
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