MYTH BURSTERS!Contractors are the industry’s

saving grace!PREPARED BY AFRICAN SUN MINING (PTY) LTD

PRESENTED BY PAUL KHOSOLO

07 June 2017

Background Over the past years of mining in South Africa, there has been an

increase of mining operations on several commodities due to market

demands.

Most junior mining companies emerged to rapidly increase levels of

production in meeting market demands.

Both giant mining houses and junior mining companies are using

contractors to assist them in achieving the set production volumes.

Mining contracting can be from shaft sinking to final product on

underground operations and planning to rehabilitation in surface

mining.

Importance of miningcontractor

Mining contractor conducts day to day mining operations either on surface

or underground workings especially where the mining house has a short fall

on necessary skills and specialized equipment for specific areas.

Contractors perform all the intensive mining activities such as shaft sinking,

pillar mining, vamping, reclamation, high speed decline development,

stoping in underground operations.

Planning, surface drilling, bulk blasting as well as rehabilitation, load and

haul in surface mining; Processing, Primary Beneficiation (or Washing),

Materials or Commodity handling.

This operations requires highly skilled personnel of which is mostly not

available from mining houses.

Advantages/Benefits ofcontract mining

Contract mining gives flexibility to mining companies.

Peace of mind when it comes to capital outlay for new projects.

Minimize risk for clients on labour relations.

Rapid resource increase on high demand.

Short term projects.

Afford time for mining house to focus on prospecting.

Sourcing of specialized equipment.

Cost reduction due to small overheads cost.

Efficiency spread towards projects.

Starting new projects in remote areas.

Advantages/Benefits ofcontract mining(cont.)

Contractor has ability to quickly deploy and supply skillful, trained and

experienced personnel from the labour pool.

Transfer of skill to local communities.

Equipment usage in short term projects.

Quality assurance.

Target achievements.

Contract mining is fundamentally about managing risk.

Contractors manage risks around workforce availability, OHS and

environmental incidents.

Advantages/Benefits ofcontract mining(cont.)

Contractors are also able to benchmark their operations across a range of

mines to maximize efficiencies.

Contract mining also provides a great deal of flexibility for owners. This

flexibility allows the owner to terminate/cancel contracts after regular

reviews and employ another contractor or take the work in-house.

During fluctuating market cycles as demand picks up, contractors are also

able to quickly react and ramp up during the mobilisation and

commissioning phase.

Contractors allow a client to increase production without incurring increased

capex. They also allow the client to rapidly growth of new mines or

expansions of existing mines.

Conclusion

Contractors are really the industry’s saving grace.

Contractors can offer advantages to mining house only if:

1. Properly implemented and managed.

2. Issued with a Proper scope of work.

3. Both contractor and mining house to understand the economics or the

operation including mining method agreed to.

4. There is a solid and signed Contractual agreement.

5. Understand the production rate, required equipment and operation

costs.

Thought of the day

If contractors are not a saving grace, then

why mining houses are continuing to appoint

them on their operations?

THANK YOU