mining proposal - wa , page-4

With thanks to blue turtle from another thread...this is his post on another co.....but look how much of these points we already have achieved.


As someone who has built process plants myself i thought I'd put together a putative schedule and order of play for building our mine. I know this will be perceived in certain circles as a negative posting, however, mine building is what I do for a living so bear with me. Here goes...

1) in the recent Quarterly the second hand plant possibly available in Brazil for 'potential' utilisation had, so far, only been 'identified'. Evaluation for It's suitability for use had not been completed. This needs to be completed ASAP.

1b) a finance deal has to be in place before AVB can proceed to negotiate the purchase of any plant equipment: in any condition. When it is in place we will hear about it in an Ann: yet to be received.

1c) before a finance deal can be completed a Bankable Feasibility Study (incorporating a mine plan) needs to be complete and in place: essential and worthy of another Ann.
NB: a BFS might only be valid if sufficient infill drilling is undertaken to prove up the Resource to a Reserve. This might simply entail proving up an ore reserve of sufficient recoverable copper that would guarantee payback (I'm not sure of the precise JORC requirements for Aussie banks operating offshore or of Brazilian banks etc).

2) when evaluation for suitability for purpose is complete and a purchase negotiated and completed an Ann will be released to inform us of this fact (a significant milestone). An Ann to this effect has yet to be released. (Conditional on completion of 1b & c above.

3) once the purchase of the second hand plant has been negotiated and completed it will need to be transported somewhere for refurbishment. In all likelihood, this will be some major industrial zone given AVB possess no on-site fabrication/maintenance facility..
To dismantle and transport old plant to fabricator Co for refurbishment allow 4-6 weeks ( will depend on bodies available, crane availability, number of trucks used, distance etc.. No real need to deliver it all in one day though)
Refurb of float cells capable of 60tph at 45mins residence time... 6-8 weeks minimum if scheduling permits (will depend on capacity of contractor)
Refurb of conditioner tanks and thickeners (steelwork and agitators etc..) 2-3 months assuming availability of steel/parts and subcontracted services (rubber coatings etc).
Refurb of 150-200tph crusher plant (no small task): coarse and fine ore bins; jaw & cone crushers, conveyors, dust collector and baghouse... -3-4 months at best ( parts and scheduling permitting) could stretch to 6-9 months easily.
Refurb of ball mill.. Depending what it needs.. Should be installable and refurbed with liners/bearings etc on site. If serious remedial work is required to the shell then... open ended timeframe!
Other miscellaneous refurb tasks: plate filter press (or disc filters); slurry and water pumps; 2-3 months if suitable parts/manpower are available etc.
NB: It is unlikely any single heavy fabrication shop could dedicate all of its efforts solely to AVB related tasks and so some work will need to be farmed out to smaller subcontractors.. Best estimate of completion of refurb tasks and delivery to site? 6-8 months, more if slippage is factored in (to mb 9-10 months). Even in the West it would be quite a major task to monitor the various sub scheduling and keep it all on track. In Brazil? Might be OK otherwise refer to in-house Good Lawyer..

4) Once the plant purchase and refurb schedule are committed to then the site works can be commenced: concrete foundations for all the equipment and subsequent floorworks. To maintain an expeditious construction schedule these would need to be complete (in large part) prior to delivery of the refurbed plant. Commencement of such works would be another significant milestone worthy of a major Ann (commencement of Plant/Mine construction). Dependant on 3 (above) being agreed to and in progress.

4b) In order to avoid a major (and potentially disastrous) cock-up, construction of the footings etc for the plant might not commence until the refurb of the plant is complete and it's been delivered to site. It's not unusual for dimensions to change a little along the way (pump/launder locations/dimensions are often changed at the last minute) and for perfectly good and expensive concrete plinths to be useless come the time to install the equipment. If operating to a tight budget with no $$ contingency allowance I would expect this to be a realistic construction scenario.. Ball mill footings could be completed in advance of delivery to site but delaying other civils would add at least a couple of months to the build time.

5) in theory, construction of the plant 'could' be achieved in as little as 6-8 months (its not a big plant!) though electrical work always drags on for far longer (and costlier) than predicted. If all goes to plan from the moment the concrete foundation plinths are ready to receive equipment on them then commissioning should be able to commence in 10-12 months at best. Add a few months or more if the concrete works are done on an 'as required' basis.

6) Revenue 'could' be earned in as little as 12 months from commencement of Plant construction. This assumes that mining has already started; mine roads constructed, waste rock dumps created, overburden stripped, ore stockpiled; tails dam design approved and constructed. Most of this would usually be farmed out to contractors: quite a meaty schedule in its own right and worthy of several milestone Anns.

No small feat to achieve all this and to a schedule...

So.. for the mine build to commence in as little as 4 months from now the Finance deal really needed to be in position as of end last Qtr 2012 at latest and the plant purchase deal completed at same time. Plant should already be dismantled and en route to the refurbishers by now in order to facilitate completion of delivery of all parts to site by say.. October 2013. NB there's no need to receive all parts on site at once as there's a logical construction order which needs to be followed.

By now I would also have expected an Ann to suggest a location for the plant and ancillary services (tails dams.. water ponds etc) had been identified and surveyed by now.. You can't simply plonk them anywhere.. The selected site has to be appropriate in many engineering aspects, eg; control of rainfall runoff, noise and visual impact (environmental constraints), and specific permissions obtained where necessary

In short.. The way i see it is we're already experiencing slippage of schedules. Throwing more money at the project (eg ordering a brand new plant (possibly from China) or a ready refurbed one from Canada or the USA will only result in increased costs and add no real benefit to the schedule. These are last resorts if the Brazilian plant is either unobtainable or beyond repair.
NB: 'evaluation' of the second hand plant in Brazil probably refers to understanding the condition and amount of work required to upgrade it (a lot of companies do the minimum of maintenance if nearing the end of mine life and, by the time they come to move it on, the plant is often as close to being scrap as makes no odds). I wouldn't be surprised if its pretty goosed (rusted out with patched patches etc) and they are struggling to find a company to take on the refurb tasks and to do so at an acceptable price. Very hard to go to a bank for financing until you have a clear and definite quotation for plant refurb and delivery schedule...

Furthermore,, without a bottomless bag of cash available, the BFS (with mine plan) is on the immediate critical path and thus one of the most pressing issues: the suitability, cost quotation, and delivery schedule of the plant is the second pressing and interlinked issue. The finance deal can't be finalised without them. I thought the recent Activities Report was rather weak in these areas and the likely reason for the recent SP slippage.

Management 'could' pull it off within the aspirational time frame given. In order for the given schedule to retain any credibility i would hope to see Anns relating to completion of the first few points (above) within the coming days (EoM at very least).


Discuss..

BT