ALLUVIAL DIAMOND (BUSINESS) VALUE MANAGEMENT

Transcription

1 ALLUVIAL DIAMOND (BUSINESS) VALUE MANAGEMENT DR. KURT PETERSEN GROUP CONSULTING METALLURGIST, ROCKWELL DIAMONDS MINERALS BENEFICIATION AND PROCESSING 2012 ISANDO, JOHANNESBURG 17 TH MAY 2012

2 ROCKWELL ROUGH DIAMOND PRODUCTION: AVERAGE US$/CARAT 2 World Diamond Average $90/carat <0.3 c/stone # Tirisano (North West Province, RSA) $700/carat ~0.9 c/stone # Klipdam (Vaal River, RSA) $1,100 /carat ~1.2 c/stone # Small diamonds used in lower price point and pavé jewellery Engagement rings (Bridal-range), mid to high price point jewellery Engagement rings, high price point jewellery Saxendrift /Wouterspan/Niewejaarskraal (Middle Orange River, RSA) $2,000/carat ~2.5 c/stone # High-end luxury jewellery High Net Worth Individuals Investment Stones # - Rough stone average sizes

3 ROCKWELL OPERATIONS AND PROJECT LOCALITIES: NORTHERN CAPE AND NORTH WEST PROVINCES, SOUTH AFRICA 3

4 4 STRONG FUNDAMENTALS FOR DIAMOND SECTOR Diamond DEMAND in carats forecast to grow at 6% p.a. to 2020 OUTPACING annual SUPPLY growth of 2.8% SHORTAGES, particularly in large carat diamond segments CHINESE and INDIAN MIDDLE CLASS to double by 2020 Driving demand surge Combined market share predicted to EQUAL US market share of 30% by 2020 Growing SCARCITY of +2CT diamonds Currently represents 5% of diamond PRODUCTION and 50% of sales VALUE for producers 100% 80% % of carats exceeding 2 cts % of revenue exceeding 2cts 60% 40% 20% 0% Saxendrift Klipdam Tirisano

5 5 PRESENTATION STATEMENT If you don t identify your BUSINESS bottlenecks, you will always over-capitalise and over-commit to every activity, which places stress on your decisions to grow and corners you into being a commodity price driven business There is no substitute for fit-for-purpose technology or the decision to decide what is not Rockwell is committed to rationalising operations, sweating assets, applying the right technologies and being commercially diligent in order to establish production certainty

6 6 THE VALUE MANAGEMENT PLAN UPFRONT Resource Estimation Short and Long term Mine Planning. MEASURE daily What are you measuring and why? What does the equipment actually do? MONITORING Pit to Plant Effectiveness. Focus on Efficiency and Stable Production TECHNOLOGY strategy that improves diamond recoveries, reduces complexity and overall costs A BUSINESS strategy that allows Rockwell to dynamically focus on market demands FLEXIBILITY to match production to market demands REMOVE diminishing and negative returns from the business

7 7 KNOW THE GEOLOGY DEPOSITION knowledge is crucial Reworked GLACIAL RESOURCES more difficult to predict A little bit of FEEL is also required

8 DATA MANAGEMENT: RECORDING PAST PERFORMANCE Data collected BLOCK BY BLOCK mine Comparison to PREDICTED Data 3D Virtual REPRESENTATION of grade, value and stone size Tirisano Mined Block Model HISTORICAL and FORWARD looking data used into unique forecasting tool PAST PERFORMANCE KEY IN PLANNING FUTURE MINING Tirisano Mine Block model per level

9 9 OUR EXPECTATIONS Recovered Grade, cpht Spot Grades Average Grade Plus Minus Series Cubes per 10 Days SHARPEN UP ON ALL OF YOUR EXPECTED OUTCOMES!!!!

10 10 PREDICTING GRADE/RECOVERY VARIATION Global grade => Dilution => Sedimentation Characterisation => Plant => Source Variance Recovered Grade, c/hm Data Model Jan Feb Apr Jun Jul Sep Nov Dec Feb Apr-12 Date (Day, Month, Year)

11 11 (RELATIVE) EFFECTIVENESS FACTOR 100% 90% Generic Efficiency Factor, % 80% 70% 60% 50% 40% 30% 20% 10% 0% 07-Jan Feb Apr Jun Jul Sep Nov Dec Feb Apr-12 Date (Day, Month, Year) The SYSTEM has a given EFFICIENCY, which we can measure and then diagnose The RELATIVE FACTOR shown here allows us to track our possible CHANGE IN STATE This allows us to follow the SENSITIVITIES of the entire process

12 12 WHAT DOES THIS EQUIPMENT ACTUALLY DO? PANS are extremely sensitive to VISCOSITY, FEEDRATE and PARTICLE SIZE DISTRIBUTION Density, rd i.e. EVERYTHING Top Layer of Pan Bottom Layer of Pan Sample Number (1 = Outer Pan Wall) Density, rd Bottom Top Sample Number (1 = Outer Pan Wall)

13 13 FIT FOR PURPOSE TECHNOLOGY (SCREENING) Greater than 5% TO 8% MOISTURE in sand rich material creates screening problems Bivitec enables true NON-BLINDING, DRY, infield screening Screen delivered spec ed at 400 TPH, but delivers 600 TPH

14 14 FIT FOR PURPOSE TECHNOLOGY (CONCENTRATION) Pans concentrate at about 70% EFFICIENCY at a yield of 5% to 10% OPERATOR assumes great responsibility for STABILITY HIGH THROUGHPUT X-ray machines can treat 30 TPH TO 100 TPH Will replace almost everything from INFIELD-SCREEN onward

15 15 FIT FOR PURPOSE TECHNOLOGY (BOUREVESTNIK) TEST PLANT OPERATING AT SAXENDRIFT WITH PRIMARY CONCENTRATOR AND SECOND STAGE REDUCTION

16 16 FIT FOR PURPOSE TECHNOLOGY (RESULTS) BOUREVESTNIK (Russia) high throughput X-ray machine Saxendrift has a PRIMARY CONCENTRATOR and SECONDARY PASS machine Sample Sample Sample Expected Actual Type Size Size Recovery Recovery tonnes m 3 Carats Carats Handsort Tails Handsort Tails Handsort Tails Handsort Tails Handsort Tails Handsort Tails X-ray Tails X-ray Tails X-ray Tails

17 17 CONTRIBUTIONS FROM EACH SIZE FRACTION Sunk costs in the OVERSIZE from the pit to an infield screen and plant (+25 mm) FINE MATERIAL is not particularly profitable Fine material presents a risk to UTILISATION, THROUGHPUT, CAPITAL COSTS etc. 100 (Revenue - Costs), R/m Fixed 25 mm 100 mm 10 mm 8 mm Pan 3.6 mm 4.5 mm 5.4 mm 5.8 mm 6.5 mm Cumulative Per Business Size % mm Passing % % % % % % % % % % Business Categories

18 18 RELATIVE CAPITAL PAYBACK PERIODS Unattractive components to the NPV EQUATION INCREASING PRODUCTION with the fines capital overhead is very difficult 19 Relative Payback Period to +10 mm mm 8 mm 6.5 mm 5.8 mm 5.4 mm 4.5 mm 3.6 mm Pan Business Categories

19 19 A MINING/PROCESSING BUSINESS STRATEGY AN ECONOMIC APPROACH TO DIAMOND RECOVERY BUSINESS #1: Should not impede Business #2, unless there is a real market driver BUSINESS #2: The immediate basis of the company 70% 60% Carats Revenue Percent per Size Fraction, % 50% 40% 30% 20% 10% 0% Recovered Diamond Size, mm

20 20 CHANGE IN BOTTOM SIZE: SAXENDRIFT Changed BOTTOM SIZE from ~3 mm to 5 mm Expect to lose about 5% in grade. Current estimates show POSITIVE BENEFITS offset change INCREASED CAPACITY in plant by 25%. Overall efficiency has improved Recovered Grade, c/hm Data Model Jan Feb Apr Jun Jul Sep Nov Dec Feb Apr-12 Date (Day, Month, Year)

21 21 COST REDUCTION IS A CONSEQUENCE OF VALUE MANAGEMENT EASIER TO REDUCE EFFECTIVE COSTS ON COARSE STONE PRODUCER I.E. SAXENDRIFT 160 Total Cost of Production, R/m Saxendrift Klipdam Model Cubes per Month Mined

22 22 PROCESSING CHALLENGES CURRENT PRODUCTION between 100k and 300k tonnes per month per mine Biggest processing challenge is WET MATERIAL and clay (Bivitec wet sand!) The clays require significant SHEAR STRESS to deform The clays have a high content of -50 MICRONS, which is problematic CLAY AND WET MATERIAL result in a loss of stable production and lead to inefficiencies and significant down-time WATER now becomes a commodity along with capital required to reclaim the water

23 23 WET FRONT-END DEVELOPMENT IN-HOUSE DEVELOPMENT of 350 tph clay removal system (provision for 350 m 3 /h water) Critical point is to get clay from plastic to FLUID (DISSOLVED) Future CHOSEN TECHNOLOGIES must to specifically get mechanical action on clays

24 24 ROCKWELL PLANT DESIGN Heading toward M 3 per month HIGH UTILISATION, generous front-ends. No single step screening. Reduced blinding. Generous exposure to MAGNETIC REMOVAL (belt + in BV plant) DECOUPLED businesses FINAL DBW produced by dedicated machines/systems HANDSORTING minimised

25 25 BUSINESS VALUE MANAGEMENT MEASURE DEFINE expected outcomes MONITOR and ADJUST consistently and continually RATIONALISE and IDENTIFY technology limitations IDENTIFY diminishing returns Have the will to be DILIGENT and IMPLEMENT

26 26 COIN PRODUCTION KLIPDAM MINE (RECOVERED ACROSS GREASE) Number of Coins Year