Case studies

Using Zero-Based Budgeting to Create Value: the Jinfeng Gold Project

Turning a feasibility study produced for Chinese regulatory approval into a bankable document to raise financing from a consortium of international financiers is no easy task. The former is based on a series of prescribed formulae and processes, the latter on technical and economic assumptions that must be robustly defended to the banks' technical experts.

When you are the first western mining company to set up in the People's Republic of China, there are no comfortable comparisons to other mine's costs to get your own costs of production: everything has to be worked up from scratch.  

At Sino Gold’s Jinfeng gold project, Beth taught zero-based cost estimating to the engineers from the Chinese design institute*, built all the financial modelling and liaised with suppliers such as Caterpillar to turn raw cost data into operation-specific estimates. She then defended the economic feasibility study to the technical experts. The Jinfeng gold project was judged technically and economically feasible and financing was secured.

*NERIN - Nanchang Engineeering & Research Institute of Non-ferrous Metals

It's all about the Margin: Thiess' Mt Owen coal project

When you work for a contract-miner, you soon learn that it's all about the margin. And when the contract is for whole-of-mine services from brown fields exploration through mine planning, operations, maintenance, processing and train load-out for an initial term of 8 years, you soon realise that that exceeds the average commodity cycle. Assumptions about costs, commodity prices and financial risks in the contract bid are soon out-of-date. Too bad that is the formula on which you are getting paid!

At Thiess’ Mt Owen coal operation, during a period of falling commodity prices, Beth developed the cost management and operational strategy skills of the front-line supervisors, providing them with timely, relevant activity-based cost reports, key to Mt Owen achieving most productive open-cut mine in a global benchmarking study,