gold

Planning with Confidence

Ryan Miles Principal Advisor
Integrated Planning

Business Process Improvement through Integrated Planning

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 Planning with Confidence Outline gold

 Who is AngloGold Ashanti?

 Context within an uncertain Gold Market.
 Why Business Process Framework?
 What is Integrated Planning? can take you to the ends of the earth.

 What is the Confidence Level of the Plan?

 Questions

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 AngloGold Ashanti gold

To be the leading mining company

 Third largest gold producer in the world in 2012 (Gold production of 4.16Moz)
 2012 All Injury Frequency Rate (AIFR) the lowest on record at 7.72 per million
hours worked.
 20 operations in 10 countries, on four continents, with corporate headquarters
in Johannesburg, South Africa
 61,242 employees globally (including contractors)
 Ore Reserves at end of 2011 totaled 75.6Moz and Mineral Resources of
230.9Moz. 2012 Resources increased 10.6Moz to 241.5Moz reflecting
exploration success at La Colosa and Tropicana.
 AngloGold Ashanti is listed on the Johannesburg Stock Exchange (JSE), the
London Stock Exchange (LSE), the New York Stock Exchange (NYSE), the Ghana
Stock Exchange (GhSE) and the Australian Securities Exchange (ASX).

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Global Profile gold

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 Top 10 Gold Producers for 2012 gold

1. Barrick Gold Corp. (7.42 Moz)

2. Newmont Mining Corporation (4.98 Moz)
3. AngloGold Ashanti (4.16 Moz)
4. Gold Fields Limited (3.3 Moz)
5. Kinross (2.62 Moz)
6. Goldcorp Inc. (2.39 Moz)
7. Newcrest (2.07 Moz)
8. Polyus Gold (1.68 Moz)
9. Harmony Gold (1.22 Moz)
10. Buenaventura (1.06 Moz)
Source: www.mining.com/top-10-gold-company-production-for-2012-80750/

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 Gold Prices gold

New Years 2001 - $268.00 New Years 2007 - $636.90

New Years 2002 - $278.40 New Years 2008 - $835.60

New Years 2003 - $347.50 New Years 2009 - $881.10

New Years 2004 - $415.30 New Years 2010 - $1,096.50

New Years 2005 - $437.10 New Years 2011 - $1,421.60

New Years 2006 - $514.90 New Years 2012 - $1,675.00

Source: http://www.prweb.com/releases/New-Years-2013/Gold-Price/prweb10282925.htm

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 Gold Prices gold

New Years 2001 - $268.00 New Years 2007 - $636.90

New Years 2002 - $278.40 New Years 2008 - $835.60

New Years 2003 - $347.50 New Years 2009 - $881.10

New Years 2004 - $415.30 New Years 2010 - $1,096.50

New Years 2005 - $437.10 New Years 2011 - $1,421.60

New Years 2006 - $514.90 New Years 2012 - $1,675.00

Source http://www.prweb.com/releases/New-Years-2013/Gold-Price/prweb10282925.htm

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 Optimize the entire process flow gold

 The Goal – Written by Eliyahu M. Goldratt in 1984

– Revolutionized Manufacturing Industry.
 “The Goal is to make money now and in the future; everything
else is a means to the goal.”
 “Optimize the flow of the process, not local
efficiencies”
 Introduced the Theory of Constraints
 Dependent event variation must be
accounted for to optimize the process flow.

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 Why Business Process Framework?
gold

The Business Process Framework is a system for managing the work that people do.

− To standardize the process for doing work

− To Reduce Variation and Provide Clarity
− The Right Work, Right Time, Right Way
− Planned work is 30% more effective than unplanned work.
− 60% of Environmental incidents are linked to poor planning.
− 80% of Safety issues are linked to inadequate planning.
− Planned maintenance support work is 10% of the cost of an in-service failure.
− 60% - 80% of variation in Plant performance is caused by not doing the right
work, at the right time, in the right way.
− Properly constructed systems facilitate and enhance delivery of individual
effort.

© McAlear Management Consultants 2007

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9
Business Process Framework gold

PLAN DO

ACT CHECK
© McAlear Management Consultants 2007
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 Integrated Planning Purpose gold

 Sets the Confidence Level of the Plan.

– Validates the plan
– Optimizes the schedule.
– Does not replace current planning software.
– Requires a statistical model to simulate the plan.

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 Integrated Planning – 4 Questions gold

How much will it

cost?

What are we
capable to
achieve?
Can we actually
achieve it?

How do we achieve it?

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 Integrated Planning – Multiple Angle Approach gold

Shot Muck

Performance Targets
Inventory
Open
Open pit
Drill &
Drill
pit
& Blast
Blast
“top down approach”
Transform Store
Store
Stockpile Stockpile
CIP
CIP &
& Gold
Gold
Transporting
Transporting Crushing
Crushing Milling
Milling Leaching
Leaching Production
Production
Blasted
Muck
Underground
Underground Transfer Store
Store Transform Store
Store Transform Transform Transform
Advance
Advance

Transform Store
Haul
Haul Cycle
Cycle Capacity
Capacity

Spotting
Spotting Loading
Loading Hauling
Hauling
Production Dump
Dump Time
Time Return
Return Time
Time
Time
Time Time
Time Time
Time
Strategy
Production Strategy
Mine
Mine Plan
Plan
Operating Master Schedule
Production Activities
Plant
Plant Flow
Flow Operating time /
Input Production
contribution
Maintenance
Maintenance
Intervals
Intervals Service Activities Calculate Simulation of
downtime / frequency
Input & production
Asset
Asset
Reliability
Reliability Downtime / Simulate
Other Support Production Impact
Activities
Site
Site Risk
Risk
Mitigation
Mitigation
Input Calculate “bottom up approach”
Service
Strategy

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 What is the Confidence Level of the Plan? gold

 Actuals can differ greatly from Plan for several reasons

– Different rock type characteristics
– Work Execution is not consistent
– Unplanned Maintenance
 Stakeholders demand high level of confidence in Returns
– Do not like broken promises in market guidance
 Results are below the expected outcome if dependent variation is
not accounted.
 Paradigm Shifts
– Statistical evaluation of total process flow
not only individual parts.
– Not using only averages but including
effects of Variation.

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Which Process Performed Better? gold

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 Variability analysis using histograms gold

Control Chart Histogram

Argentina
13100
Argentina -
- CVSA
CVSA -
- Daily
Daily Drilling
Drilling Meters
Meters -
- 1
1 Year
Year Analysis
Analysis
In
In d
d ivid
ivid u
uaal
lss 12500
Se
Se t
t 1:
1: UCL
UCL =
= 7,806.83,
7,806.83, Me
Me an
an = 5,699.97, LCL
= 5,699.97, LCL = = 3,593.11
3,593.11 (212
(212 -
- 364)
364) (m
(m R
R =
= 2)
2)
8,000
11900
8,000 UC L
UC L
11300
7,000 10700
7,000
10100
UCL
UCL
6,000
6,000
9500
M e an
M e an
8900
5,000
5,000
8300
M e an
M e an
7700
4,000
4,000 7100
LCL
LCL
6500
3,000
3,000 5900
LCL
LCL 5300
2,000
2,000 4700
4100
1,000
1,000 3500
2900
0
0 2300
1700
1100

0 20 40 60 80 100 120 140

Frequency
Frequency can also be
140 expressed in a %

120

100

80 Distribution
Frequency

60

40

20

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 Dividing histograms into percentiles gold

400
Key Points
350
300 • 75% of the data points

75th Percentile
250 are below the 75th
200
percentile value.
150
100
50
75% of
data point
• The 75th percentile
0 number of a process is
seen as an stretch but
achievable process target
that can be sustained if
the process is stable and
constant.

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 Expressing targets in confidence levels
gold

400 Key Points

80% Confidence Level

350
300 • A confidence level is a
250 statistical calculation that
200
indicate the number of
150
data points that will
100
50
exceed a number
0 specified.

• A confidence level
associated with a
number, measures the
number f times out of a
100 that the number can
be expected to be
achieved.

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 Impact of variation on a confidence level
gold

500
450
Key Points
400 80% CL • Two processes with
350
300 exactly the same mean
250 Increase in 80%
200 confidence level could have very different
150 numbers representing the
100
50
80% confidence level.
0
• By reducing variability the
80% confidence level
number will move closer
to the mean.

• Reduction of variability
increases the
predictability of the
output.

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 Aligning Confidence Levels
gold

Optimise the OMS to align with the SPT target …

st rative
Illu

SPT output
OMS output

… or reduce the SPT target to ensure the required

confidence levels in the plans.
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Example of Integrated Planning gold

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Questions? gold

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