AAOM Handbook

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Figure 17 -The parameters that need to be inputted for the different distributions Cost: Contributing to the Unit Costs are several parameters that can vary independently of each other, and that are determined by the choices of Production and Service Strategy for delivering a single set of Performance Targets. Unit Cost (cost per on spec unit of output) = Total Costs / Units on Spec = (Fixed Costs + Variable Costs) / Units on Spec The same Unit Cost can be achieved with different combinations of these characteristics. Each of the modelled processes require cost inputs at each level as shown in the example Table 3 below. Total cost must include costing of both waste and valuable mineral production streams.

Table 3 – Typical Cost Inputs for each of the processes in the value stream

COST INFORMATION

MINING COST DATA

Cost (ZAR/annum)

Tonnes Moved/ann Fixed

Variable FC (ZAR/day)

VC (ZAR/to

Drilling Cost Blasting Cost Loading Cost Hauling Cost Support Cost

48% R 80% R 51% R 66% R 48% R 14% R 52% R

550 947 R 186 272 R 752 374 R 1 072 170 R 590 093 R 952 962 R 4 318 311 R

1.80 2.62 2.78 7.46 1.94 0.53

R R R R R R R

386 494 625 337 403 587 561 086 596 1 158 411 318 414 817 718 402 152 444 3 260 366 288

102 888 079 102 888 079 102 888 079 102 888 079 102 888 079 102 888 079 102 888 079

52% 20% 49% 34% 52% 86% 48%

Central Services Cost (on mine)

Total Mining Cost

16.37

BENEFICIATION COST DATA

Cost (ZAR/annum)

Tonnes milled/annuFixed

Variable FC (ZAR/day)

VC (ZAR/to

Concentrator A Concentrator B Concentrator C

25% R 30% R 20% R 25% R

2 236 554 R 1 669 960 R 477 132 R 4 473 108 R

38.68 63.66 74.27 46.42

R R R R

1 088 456 381 870 765 105 217 691 276 2 176 912 762

7 035 026 4 103 765

75% 70% 80% 75%

586 252

Total Beneficiation Cost

11 725 043

In the modelling of the potential benefit of that investment we should be dealing only with the fixed and variable operating costs. The results of this modelling, plus the capital costs, determines the NPV of the investment. Working Capital at any point in time is calculated from stockpile levels and the costassociated with transforming and storing the material.

Operational Planning: Building a Business Structure Performance Model Page 14 of 39