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| Iron Ore - Major Mine Expansion |
Context / Scope of project
In preparation for a significant expansion project of an iron ore deposit in the Australian outback, a mining company sought to optimize the value of the project in the pre-feasibility study. Their challenges included both high expected operating costs and significant capital investment to develop infrastructure for a concentrator, power supplies, and water for processing. Initial steps to improve the project value only achieved a break-even result. The client needed to quickly identify additional ideas to improve the valuation and rationalize the investment. Further, in order to make the improvements quickly, they needed help to coordinate their efforts and formalize the improvement pipeline.
Client achieved in 3 weeks:
- Identified potential for a 15% increase in volume resulting in an incremental NPV impact of $700M
- Developed additional 12% reduction in capital opportunities, achieving nearly 50% reduction from the original baseline
- Validated 20% projected decreases in operating costs; identified additional 5-10% additional reduction opportunities
- An additional $1.5B increase in projected NPV valuation, in addition to approximately $2B client identified during initial round of optimization
- $1B list of additional opportunities to pursue during a potential bankable feasibility study.
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What we did:
- Conducted idea workshops with multiple constituents, including the project team, external contractors, and shareholders, to collect over 75 proposed ideas for evaluation.
- Confirmed and defined the original baseline NPV and round of optimization.
- Consolidated existing and newly viable improvement ideas into one central tracking and management tool.
- Developed value driver trees and simple models to support decision-making
- Allowed client to prioritize improvement efforts based on valuation impact.
- Determined the sensitivity of factors such as market prices and input costs.
- Populated idea assessment forms detailing the scope of the outstanding opportunities, confirming idea owners, and specifying the workplan steps to confirm the value in include in the pre-feasibility study.
- Proposed a structured development process to clearly structure the interface and responsibilities between the mine developer and their shareholders.
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