New Mine Philosophies For An Old Mine

By

Jim Simpson
General Manager, Peak Gold Mine
Wheaton Minerals Asia Pacific P/L

INNOVATIVE MINERAL DEVELOPMENTS SYMPOSIUM

Shore School, North Sydney, NSW

Wednesday October 6th, 2004

Sydney Branch
AusIMM

Principal Sponsor

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New Mine Philosophies For An Old Mine

Jim Simpson1
ABSTRACT
When the development of a new mine is considered in the feasibility studies and subsequent
project phases, all aspects of the operation of that mine are carefully considered to ensure the best
chance of success. It can also be said that established mines develop certain mindsets, cultures
or status quos that can often inhibit the potential of the mine.

When Wheaton River Minerals (WRM) purchased the Peak Gold Mines (PGM) from Rio
Tinto in March 2003, it adopted operational philosophies as if it were a new mine by
challenging all the existing paradigms.
One of the first key steps in achieving this was to ensure that the right people were in the right
jobs. The next step was to ensure that no stone was left unturned. We live in a dynamic industry
and market forces can have a large impact on how we make decisions. The last step was to
carefully collate and analyse the facts on how the business operated to develop a logical strategy
to maximise potential.
By applying a back to basics approach and focusing on simple processes, the business and the
stakeholders can be well rewarded. This paper examines the process of how changes in each
area of the operation is transforming PGM from a tired, high cost, short life operation, to a business
that will have a mine life in excess of ten years, producing at cash costs less than $250/oz.

INTRODUCTION
When buying into a mature operation, it is an opportunity not to be missed. It was evident from the
outset that a distinct culture and status quo had developed at Peak Gold Mines (PGM). There was
also a definite undercurrent of negativity about the future potential of the operation. The Peak was
essentially unloved (the reason for the sale), depicted as having a short mine life, had little recent
capital reinvestment and was seen as a poor cousin to bigger operations. A deeper investigation
of the due diligence document detailed an incredible potential in the resources at PGM which led to
the purchase by Wheaton River Minerals (WRM) in March 2003. With the operation so well
established and engineered, the conclusion was that what this operation really needed was a
positive outlook to realise the operations true potential.
The simple process that WRM adopted to take PGM forward was to view the operation as a new
project. As with all new projects, the first important ingredient for success is selecting good,
positive people. This philosophy was applied to Peak and within three months of the change of
ownership only two of the original management team remained. This was a critical step in setting
a positive outlook going forward. The negativity from the previous management group was
removed and replaced with a positive, can do management team.
The second part of the process was to review all aspects of the operation from exploration/geology
through to marketing. By challenging the status quo in each area, the positive culture became
more and more evident and the results of this were being reflected in other aspects of the
operations.
This was followed by immediate actions to demonstrate the companys sense of urgency. This
process was made a lot easier as many of the operational personnel were already convinced that
1

General Manager, Peak Gold Mine Wheaton Minerals Asia Pacific P/L

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the current ways of conducting business were not sustainable. The new plans and proposals
presented by WRM were not too different to what was done in the past. There was no paralysis by
analysis and decisions were reasonably fast and furious.
Another major consideration for success in projects is the timing of future production. The Peak
orebody was mined from 1992 through to 2002. However, the overlapping of other high grade ore
bodies with timing of capital expenditure was not optimised. The following graphs illustrate the
capital expenditure versus profit and demonstrate that the strategic planning and the timing of
capital expenditure was not optimum. Capital development for both the New Occidental and
Perseverance ore bodies should have commenced 2-3 years earlier.
The concurrent commissioning of New Cobar open cut with the New Occidental and Perseverance
orebodies meant that very little of the ore could be processed and had to be stockpiled at PGM.
Approximately 500kt of ore was stockpiled at PGM and although this ore will be a useful top-up
supply for the mill in the future, the expense of the open cut greatly affected the operations cash
flow position during 2003.
Graph 1
TOTAL CAPITAL
45,000
40,000
35,000

$K

30,000
25,000
20,000
15,000
10,000
5,000
0
1998

1999

2000

2001

2002

2003

2004 Fcast

2001

2002

2003

2004 Fcast

Graph 2
EBIT
25,000

15,000

$K

5,000

-5,000

1998

1999

2000

-15,000

-25,000

-35,000

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SAFETY
The safety record at Peak in recent years has been very good. This can be largely contributed to
the well engineered operation, which in itself reduces a number of inherent hazards associated
with mining. Another contributing factor is the culture of the people, which has been developed
over many years of proactive safety awareness.
The following table demonstrates the recent safety record at PGM.

Table 1
Safety Statistics

LTIs
LTIFR
(200,000hrs)
TIs

2002
8
3.10

2003
4
1.60

2004 (Aug YTD)

2
1.21

60*

75

44

* Medical treatments, disabling injuries and lost time injuries.

A key change made in the area of safety is the reporting of Total Injuries(TIS) in the site statistics.
TIs include every injury sustained on site including report only injuries. Prior to 2003, medical
treatments and above were statistically reported as TIs. Even though regarded as a lagging
indicator, knowing the trend of how often a person is being injured is a good indicator of the
success and effectiveness of your safety systems.
One area that WRM identified was that the operation was being lumbered with an extensive and
cumbersome safety system, which was more suited to much larger and more complex operations.
Peak was often used as a trial mine by its parent company and this safety system was not fit for its
purpose. However, with such an extensive system, WRM has been able to put its own stamp on
individual elements within the system, focussing on key components that WRM believes make a
difference to safety performance.
More time is now spent walking the walk and talking the talk in relation to safety rather than
overloading management in bureaucratic and resource intensive systems.
Peak recently entered the 2004 MINEX awards. Although PGM was not expected to win the
coveted award, it was a good exercise to have the site audited in regard to its new safety
philosophies.
PGM received an Acknowledgement Award in recognition of leadership which actively seeks
continual business improvement, a strong safety culture strengthened by a high level of
commitment at all levels of the operation and an improved safety performance at a time of
organisational change.
A renewed enthusiasm for Mines Rescue has developed with the full support of the management
team. A cooperative and supportive Joint Mines Rescue Agreement has been signed by Peak,
CSA and Endeavor to support the mines and the community in the event of a distaster.

EXPLORATION
The Cobar Basin has always shown great potential for exploration, and was one of the key reasons
why it was a good fit for the WRM group. With the purchase of the mine and the aggressive
attitude towards exploration, Wheaton immediately embarked on an exploration and delineation
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program to prove up known mineralisation to Inferred, Indicated and Measured Resources. The
presence of drill rigs on site and increased communications of their successes had a tremendous
impact on the overall morale of the site. It was backing managements words with actions.
At PGM the extensions to Perseverance were known but not fully tested. With new commitments
to exploration and the ranking of the targets complete, it was only a matter of time before the
reporting of significant Resource increases were released. (Graph 3)
Graph 3

Mineral Resource Inventory Status Changes

1,600,000

Dec-02

1,400,000

Dec-03

Ounces Gold

1,200,000

1,000,000

800,000

600,000

400,000

200,000

Perseverance

New Occidental

New Cobar

Chesney

Peak

Total

Deposit

Graph 4
Cumulative Production And End of Year Resource Inventory Status
3,000,000

2,500,000

Production
Resources

Ounces Gold

2,000,000

1,500,000

1,000,000

500,000

0
1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Production Year

The other significant milestone achieved within the Peak leases is demonstrated in Graph 4, which
is the cumulative production and future Resources totalling 3M ozs that has more than doubled the
original PGM Resource Estimate from 1992. This was achieved after a stricter cut-off value was.
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FIG. 1 - PGM Long Section

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applied to the Resources. The approach taken was that the cut-off value for Resources includes
sustaining capital (i.e. discrete declines and level access development) because sustaining capital
is arguably an operating cost considering these types of ore bodies.

The most significant factor of Resource cut-offs being similar to Reserve cut-offs is that PGM has a
very favourable conversion rate from Resource to Ore Reserves (i.e. +85%). Aside from the
credibility value that the market assigns to an operation with such a good Resource/Reserve
conversion, it allows the operation to strategically plan and schedule a proportion of the Inferred
Resources for the life of the mine. PGM uses a Resource to Reserve conversion of approximately
70% of the Resource tonnes when preliminary stope shapes have been designed

GEOLOGY
The formation of an independent Geological Department during 2003 provided more focus on the
technical aspects of geology and allowed the consolidation of the Resources and Ore Reserves.
As with new projects, cut-off grade determination is one of the most critical first steps in estimating
Resources and Ore Reserves. One of the key elements missing at PGM was that the value of
copper was not fully accounted for. Copper was given an estimated gold equivalent but was not
dynamically applied in the block modelling process. The copper and gold recoveries were
assumed as constant, irrespective of grade.
The use of a net smelter return (NSR) algorithm to determine the true value of copper including
recovery, less smelting, refining, freight terms and royalty allowed a true cut-off value to be applied.
With the rising copper prices, the Perseverance, New Cobar and Chesney orebodies benefited due
to the significant copper credits. Under the old system the impact of negotiating favourable smelter
terms and rising copper prices would not have been fully captured.
With the block models and algorithms fully developed, the geologists are able to update the block
models on a monthly basis for short-term design, such as development ore/waste cut-offs and ring
designs. This provides the best opportunity to optimise the delivery of economic ores to the mill.

MINING
Mining Method Review
A review of the mining method quickly identified that it was unsustainable. The panel and pillar
style of stoping resulted in 30 40% of the resource being left behind in pillars that were often
unrecoverable. At depths of +900m, leaving pillars also caused major geotechnical problems
requiring extensive amounts of remedial ground support. A continuous benching mining method
(modified Avoca) was adopted and resulted in an increase in the resource recovery to
approximately 85%. It also increased the hanging wall security with hanging wall dilution dropping
from +30% to less than 15%. The improvement in reconciliation between the mill and the block
model grade is shown in Graph 5.
The change in mining method also reduced the amount of remote loading that was required, which
in turn reduced the amount of damage to loaders. On a number of occasions in 2003, loaders
were caught in open stopes with one loader in February 2003 lost forever. Loaders still have
mechanical problems in stopes but invariably a proportion of the loader is accessible being under
the brow of the stope.

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Graph 5
Gold Grade Block Model vs Mill 2003 - 2004
9.00
8.00

Au g/t

7.00
6.00
5.00
4.00
3.00
2.00
Apr-03 May-03 Jun-03

Jul-03

Aug-03 Sep-03

Oct-03

Nov-03 Dec-03 Jan-04

Feb-04 Mar-04

Apr-04 May-04 Jun-04

Month
Block Model grade

Mill grade

Improving the utilisation, capability and availability of machinery has allowed a rationalisation of the
heavy fleet with two loaders, two IT18s and one jumbo removed from the mine and relocated to
New Cobar (a new underground project). This increased the overall utilisation of the remaining
equipment and further reduced operating and capital costs.

Development
Probably the single most important process in underground mining at PGM is the rate of vertical
advance. As with a new mine, the emphasis is on declining to a point where production can
commence. With production on line, the emphasis on decline and other vertical development can
wane and inevitably puts pressure on the operation later in its mine life. PGM was in a similar
position with the urgency and priorities not necessarily placed on decline advance. PGM has
discrete, sub vertical ore bodies with a low tonnage per vertical metre. To ensure timely
conversion of Resources to Ore Reserves, it is imperative that appropriate diamond drill platforms
are developed well in advance of production. For PGM, the greater the vertical advance, the
greater the capacity of the operation. (Graph 6)
Graph 6

35

140

30

120

25

100

20

80

15

60

10

40

20

Cumulative Metres

Metres

Vertical Advance - Underground

0
Jan

Feb

Mar

Apr

Vertical Advance

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New Occidental

Jun

Jul

Aug
Perseverance

Sep

Oct

Nov

Dec

YTD

New Cobar

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The approval and consequent commencement of the New Cobar Underground Project has
provided PGM with a third option for underground production. Production from New Cobar will
enable the operation to increase capacity from 660ktpa to 750ktpa.
The following table shows the development advance over the past three years. In 2002, three
jumbos were utilised to achieve 4824 metres. The third jumbo was decommissioned in September
2003 and recommissioned in July 2004 at New Cobar.
Table 2 Development Performance
2002

2003

2004 (est)

2005 (Bud)

Development
Advance (m)

4824

4663

5851

7708

No of Jumbos

2.75

2.5

Metres/Jumbo

1608

1696

2340

2569

Production Drilling
The old panel/pillar mining method and the resulting high number of pillars required an extensive
amount of long hole rising. The amount of drilling required to drill these rises decreased the drilling
density to approximately three tonnes/metre drilled. The change to the continuous mining method
only requires one rise at the start of each bench and allows stoping to progress through the whole
bench.
The blast hole diameter was reviewed giving consideration to the reactive nature of the ore, which
causes excessive drill hole deviation. From this review a change from speed rod drilling of 75mm
diameter holes to tube drilling of 89mm holes was adopted. Not only did the drill accuracy
improve, the drilling density improved as well. Production drilling density has now increased to 12
tonnes/metre drilled. This has allowed the decommissioning of one of the two production rigs,
which is now used mainly for cable bolting until it is recommissioned at New Cobar in 2005.

Explosives
The use of emulsion for development and stope blasting was a good concept but impractical and
expensive in its application. The cost per tonne was approximately $3.50. Emulsion systems are
ideal when used as bulk products but on a smaller scale, getting back to the basics with explosives
was paramount. The explosive manufacturers can relate all the benefits of emulsion however, the
disadvantages for PGM included:

Emulsion was twice the price of ANFO

The labour (one person per shift) was under utilised

Development was suffering with many misfires in each face

Additional equipment was required in development (i.e. hire of truck)

Suspected sympathetic detonation with holes that were fractured (there were continued
complaints from a neighbour until the change back to ANFO. However this was never
scientifically proven).

The proof in the decision was that explosive costs dropped to approximately $2.00/t as a result of
the change back to ANFO.
The allocation of labour was also addressed with some misalignment of job duty to roster and
utilised hours. An example being the stope chargers were employed every shift on a 4/4 basis.
With the modification in mining method and improvements in drilling densities, PGM was able to

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revert back to one group of stope chargers on a 5/2 basis. This reduction in total hours further
lowered labour costs. Service work was also approached in a similar fashion.
Another significant area that more established mines suffer, is in the hours worked on the job.
There can be a decline in hours spent on the job as the mine inevitably grows in size, with certain
cultures forming and management not moving with the times. Peak is well known for its pre-start
huddles, which conceptually were brilliant but drove a lax behaviour. People were expected to be
at the surface huddle at 7am/7pm. It was noted via the gate time checks that a proportion of
employees were strolling through the gate at times well after 7am/7pm. Some huddles were
known to be drawn out by up to an hour. The huddles were changed to a 10 15 minute pre-start
safety meeting and the shift change was conducted underground with the arrangement that
employees travel directly underground via the cage (in their time) at 6.40am/pm. The pre-start
safety meeting commenced at 6.45 and the workforce headed to their work place at 7am/7pm.
This saved over half an hour per shift, compared to the old system. The shift finishes at the same
time with the off-coming shift crossing over with the on-coming shift at 6.45am/pm. They have a
five minute handover and then travel to the surface (in company time) by 7am/7pm. Effective
hours worked on shift is an area where older/established mines can have wastage. Productivity
has increased accordingly as shown in Table 3. In summary, all the above changes related to a
mining cost reduction from $43/t in 2002 to $35/t in 2004.

Table 3
Underground Mining Productivity

Tonnes/man years

2002
2472

2003
3374

2004 (Aug YTD)

3559

Graph 7

$/t

Operating Unit Cost - Underground $/t mined

50
45
40
35
30
25
20
15
10
5
0
Avg Avg Jan
02
03

Feb Mar Apr May Jun

Actual

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Jul

Aug Sep Oct Nov Dec

YTD

Prior Years

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METALLURGY
The mill was designed and built in 1992 based on a ten-year mine life. Whilst capital was being
spent in developing new projects at Perseverance and New Occidental, upgrading of the mill for
future production was not considered imperative due to the perceived short mine life. A
considerable improvement has been made over the past 15 months upgrading the mill to provide it
with a further 10 year life.
Corrosion was one of the most significant issues that needed to be addressed as more Resources
were delineated. By installing a Maintenance Department under its own leadership, a long-term
perspective was instilled into the maintenance of the mill.
Until recently, spare quipment was decommissioned and used for spare parts with the philosophy
that the lower head grades for both gold and copper warranted the redundancy of certain types of
equipment (i.e. disc filters, copper columns, copper thickeners and Knelson concentrators). With
the improved throughput and grade, all these items required refurbishment.
The manning structure of the mill was also reviewed to ensure appropriate accountability existed at
each management level. For example, in the recent past, the mill had been operated by the open
cut manager. Again, this caused an unnecessary management distraction, as the New Cobar
open cut had the favoured focus due to the incumbent being a mining engineer. The day-to-day
operation of the plant was co-ordinated by the senior plant metallurgist. Again, the mismatch of
expertise and role was to the detriment of the plant. There were only supervisors on day shift,
which resulted in little accountability and decision making on the night shift.
A manager with a metallurgical background was recruited, a foremen (hands on) type role was
developed and given full operational responsibility for the plant and leading operators (shift
supervisors) were appointed for the responsibility of each shift comprised of three operators.
These leading operators report to the mill foreman.
The plant operators have traditionally been operator/maintainers with the rationale that if the plant
broke down, then the operators would switch to maintenance functions. This meant that longerterm maintenance strategies were not addressed, and more importantly, the operational issues
became less of a focus due to maintenance distractions. One good example of this was the CN
consumption. With the now strong operational focus, improvements in copper recoveries have led
to a considerable reduction in CN usage within the CIL circuit.
Graph 8

Cyanide Usage Efficiency (kg/t)

3.0
2.5

kg/t

2.0
1.5
1.0
0.5
0.0
Avg 03

Jan

Feb

Mar

Apr

May

Actual

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Jun

Jul

Aug

Last Year

Sep

Oct

Nov

Dec

YTD

Plan

Plan

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The mill has undergone a detailed debottlenecking process. The grinding circuit has the capacity
of up to 1Mtpa. The flotation and CIL circuits are designed for a 650,000tpa through-put. This
mismatch provides the opportunity to increase the throughput of the mill over the next few years.

ENVIRONMENT
Cyanide Process Water
The first environmental challenge for the site was to eliminate weak acid dissociable cyanide (WAD
CN) from the process water dam (PWD). For most of the mine life, excess cyanide-bearing water
from the plant was discharged into the PWD. This was highlighted in early March 2003 by WRM
as presenting a significant and unacceptable risk to wildlife. Modifications to the mill and the
installation of a process water tank (the reuse of the old sandfill tank) were immediately initiated to
close the mill process water circuit. In July 2003, the EPA changed PGMs reporting requirements
from reporting of five fauna deaths in a single incident to reporting of each individual death. This,
coupled with a daily wildlife monitoring program, implemented at the PWD in February 2003,
quickly highlighted that PGM had a problem, as single bird deaths, due to cyanosis, were being
recorded on a regular basis. When frequent reporting began in July 2003, the EPA responded
accordingly and provided a directive to ensure WAD CN levels in the PWD were maintained below
50ppm within 30 days. With the proactive approach undertaken in March, PGM was able to
comply with these limits within the directed time frame. Graph 9 illustrates the levels of WAD CN in
the PWD during 2003.

Graph 9

Water Recycling
With the elimination of cyanide-bearing water from the PWD, the flexibility to use underground
pumped water and site catchment water was achieved. More water could be transferred to a
number of dams for eventual re-use in the mill. The next obstacle was to remove the fine silts that
were contained in the underground pumped water, and to a lesser degree, the site catchment
water. To address this, an old underground drive was converted into a settler and silt traps were
constructed on the surface. The problem of silts being deposited in the dam, and the
consequential environment clean up is now considered negligible. The site is now in an enviable
position of being able to re-use all process water in the mill and mine and reduce the pressure on
the Cobar Water Board (CWB) to supply water . Consequently water consumption as tabled
below.

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Table 4
Water Consumption

Water consumption (KL)

2002

2003

2004 (est)

541,197

437,816

293,578

The last step in the process is to clean out the PWD which contains approximately 15,000t of built
up sediments at 3g/tAu and 1%Cu. This will be a nice windfall for the efforts spent in cleaning up
and recycling the process water.

Tailing Management
Tailing management has been another success story at PGM. The tailings storage facility
(TSF) is a centralised deposition system where thickened tailings are deposited centrally,
with no requirement to pump any residual process water back to the plant. (FIG. 2) The
TSF is actually a stack of tailing material rather that a dam.

FIG. 2 PGM Tailings Dam

was thought that the dam had only enough capacity to see out the original LOM plan (2002). With
the advent of a mine life in excess of 10 years, the construction of another TSF was a significant
and expensive requirement for the future. Over the past 15 months, Peak has been successful in
stacking tailings at much greater beach angles than ever thought possible. This has been
achieved by multi-spigot discharges, which reduces the velocity of the discharged tails. With
reduced velocity, deposition of the tailing material occurs rapidly and results in steeper beach
angles. In fact, by decentralising the TSF with multi-spigotting, the TSF is expected to have a life in
excess of 10 years.

Housekeeping
At a distant glance of PGM, the operation looked very neat and tidy. However, a short walk past
the gate presented quite a different picture. The housekeeping on the surface had deteriorated
over time and little focus was directed in this area. With the development of a centralised
maintenance group, the Maintenance Department took on the responsibility of housekeeping on
the surface. With the improvements made in an area as simple as housekeeping everyone has
gained a little more pride in the operation, dispensing with that unloved tag.

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COMMUNITY
Prior to WRM purchasing PGM, community sessions were being held to communicate closure
plans for the operation. This had a considerable unsettling effect on the town and community
morale.
As soon as the potential and future of PGM was clearly apparent, community sessions were held
to communicate the positive outlook for the Peak operations. This renewed enthusiasm certainly
assisted the process when applying for development consents for new projects such as the New
Cobar Underground Project.
A Sustainability Report and PGM brochure were also developed and circulated throughout the
community and key stakeholders. These reinforced our commitment not only to the existing
operation, but the wider community as well.
The relationship with the community and business groups has noticeably improved to a similar
level to when the mine was first commissioned in 1992. One of the highlights was the employment
of two apprentices last year which was a first in PGMs history. The employment of the youth of
our community sends a very positive message about our purpose as an employer and corporate
citizen.
Site tours of PGMs surface operations have been ministerially approved and commenced in
September 2004. This has provided tourists (and members of the local community alike) the
opportunity to view an operating mine. The initiative has been applauded by the Cobar Mayor and
business community, as it adds to the incentive for tourists to spend more than one night in Cobar.

FINANCIAL
Corporate
WRM has a unique corporate arrangement for sites across the globe. The Wheaton head office is
centred in Vancouver, Canada and accommodates 12 people for a US$2.1B business. The
corporate governance is decentralised to the individual operations. Wheaton Minerals Asia Pacific
(WMAP) is the Australasian subsidiary of Wheaton River Minerals. WMAP owns 100% of PGM
with its head office based in Sydney and accommodates 2 people for a $75M business turnover.
Corporate governance and administration is conducted on site, which includes consolidations, tax
planning, treasury, risk management, company secretarial, filings, statutory reporting requirements,
stock market releases and Sarbanes Oxley Act compliance.
The overall benefits of this arrangement is that the site is not shackled by corporate guidelines and
reports. The corporate accountant spends approximately 15 hours per week managing the
corporate requirements of WMAP. The system is seamless, efficient and focussed.

Business systems
PGM changed to a new business system (Pronto) that was more suited to the size of the
operation. The system is not overly complicated and is not resource intensive. It is an efficient
system with features including streamlined approval processes, electronic invoicing and simple
purchase/work order systems.

Insurance
Insurance premiums in the past few years have escalated as the number of large claims across the
industry have increased, and the tightening of the market with a number of insurers departing the
mining sector. The status quo of insurance premiums was challenged and negotiations with a
number of insurers followed. The end result was a premium reduction of approximately 40%.

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Contracts
As with a new project, all existing contracts were re-opened for tender and systematically renegotiated in an open market. Initially, the consensus was that PGM, under its own banner, could
not demand as competitive a price as a larger company such as the previous owner of PGM.
Again, with robust negotiations with involvement of the right people, the cost savings were well
beyond our expectations. Negotiations with 25 different companies has realised over $671K of
annual savings.

Copper Concentrate Contract

With the ability to forecast copper concentrate production into the future with some degree of
accuracy, PGM has been able to negotiate favourable terms that have made a significant impact
on the profitability of the copper concentrate. Conducting the marketing functions on site has
proven to be far more lucrative than off site marketing with on site personnel being close to the
operational and logistical issues.

Stores and Substores

It was identified that approximately $2M of inventory existed outside the store in substores. In the
past, the lack of confidence with the stores people drove the behaviour of maintaining substores
and created many unofficial purchasing officers, many of whom were high calibre tradesman (and
spent more time on purchasing than normal functions). As a consequence, the amount of
inventory increases. With the right people in the store, confidence with the system has been
regained and net inventories across site have been reduced. The store was revamped as if the
mine was being newly commissioned with a complete review of the component listing, stocktakes,
redundant items and centralisation of parts. The overall result was neutral with respect to total
inventory within the store, as inventory that was deleted/removed was replaced with substore
material.

Information Technology
One IT technician is responsible for a modern IT service which includes 140 PCs/terminals, 10
servers and various printers and photocopiers. External assistance is routinely provided by a local
firm to ensure all IT knowledge is not limited to one person. The requirement for a large corporate
IT group is unnecessary.

CONCLUSION
PGMs focus is both cost per oz and cost per tonne. Cost/oz is a more effective measure of
efficiency provided the natural grade does not fluctuate greatly. Many high-grade operations focus
on cost/oz, which can hide some operational sins. Conversely, many low-grade operations focus
on cost/tonne as the scales of economy are key drivers which can develop incongruent
behaviours. Management can be caught in the quantity versus the quality conundrum. At Peak,
an equal emphasis is placed on cost/oz and cost/tonne. Both are communicated equally, to
ensure that the correct pressures are applied to the operation for optimum performance.
The cost/tonne metric is critical in the determination of Resources and Ore Reserves. By reducing
the total cost/tonne, the resultant improvement is a positive movement along the mines
tonnes/grade curve which inevitably results in an improvement in the Resources and Ore
Reserves.
This short paper does not give justice to the amount of effort by all employees and contractors of
PGM to get the operation to where it is today.
The numerous improvements can be summarised in the following graphs.

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Graph 10

Operating Unit Costs - Site ($/t)

80
$/t

60
40
20
0
Avg Avg Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
02 03
Metallurgy

Mining

YTD

Commercial

Graph 11

C1 Cost Per Ounce Sold

600
500
400
300
200
100
0
Mar-03

Jun-03

Sep-03

Dec-03

Mar-04

Jun-04

Sep-04

Dec-04

Jun-04

Sep-04

Dec-04

Quarter
Actual

Graph 12

C3 Cost Per Ounce Sold

700
600
500
400
300
200
100
0
Mar-03

Jun-03

Sep-03

Dec-03

Mar-04

Quarter
Actual

IMD SYMPOSIUM PROCEEDINGS

Page 147

The transformation of PGM from a tired high cost, short life operation to a healthy business with a
mine life in excess of ten years did not require any complicated business improvement processes.
The simple application of a positive back to business approach and the review of all existing
paradigms are the key elements to this success story.

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