AAOM Handbook

[OFFICIAL]

INTERNAL USE ONLY

2.3 Testing future scenarios The calibrated BSP model must be used to evaluate production, cost and capital requirements for various operating scenarios. The calibrated BSP model assists in understanding trade-offs between strategies that target volumes and/or cost by providing clear visibility of options provided the required input information is included in the model inputs. Evaluating future scenarios needs to be performed using the calibrated BSP model and needs to consider future strategy changes and future operational risks. The type of constraints that should be identified and dealt with first are those related to excessive variation and then capacity i.e. bottleneck. Reducing the effects of this variation typically yields several times the output benefit of trying to shift the process operating point without reducing the variation. When variation has been adequately dealt with, then capacity constraints in the process should be dealt with. The capacity process constraints can be defined by developing modelling scenarios where the potential constraints are systematically reduced i.e. either the range of variation is reduced, storage is increased to buffer variation or the distribution is shifted. The calibrated BSP model supports the testing of scenarios through concise understanding of special cause variation on individual processes and on final system output. Depending on buffer levels, the impact of special causes on a particular process can have different levels of impact on outcome, for example, one zero day of material movement, due to rain, could possibly have no impact on crusher feed depending on ROM pad inventory level. Similarly, seven consecutive zero days due to rain, could have a totally different outcome depending on the buffer levels and off-take rates. The calibrated BSP model allows the accountable roleholder to model for specific special cause events. It is critical to follow the sections below to obtain the calibrated output for holistic analysis of constraints and opportunities as depicted in Figure 5 below. By overlaying all the processes contained in the value chain and normalized to the valuable mineral, the accountable roleholderis able to identify a constraining process in the system i.e. Mine in Figure 5 below where the budget target was 12.8mt FGO per annum and the base-case scenario showed 0.5% confidence. This necessitates testing of future scenarios to reduce variation and to shift thedistribution to the required confidence level. This is first to identify the system constraint and to deal with instabilities and excessive variation. Secondary to this, the process itself may be compared against its unconstrained output.

Figure 5 – Calibrated BSP model output

Operational Planning: Building a Business Structure Performance Model Page 34 of 39