George Hemingway of Stratalis and Kate McLaughlin of Stantec, a Stratalis strategic partner, discuss Stratalis’ unique approach to TechnoEconomic modeling – a process that allows organizations to build defendable business cases around their innovation, transformation and technology roadmaps.
Stratalis Client Case
Faced with closing a marginal asset, a leading global diversified underground miner sought our support in building the story of both understanding and modeling the impacts of innovative technologies on their Operation. With a predicted significant negative yearly cash flows and major capital expenditures required over the next 5 years, the choice was clear; something needed to change or the mine would have to shut down.
The initiative started by understanding both the vision for the future aspired by the mine operations and executive team, as well as mapping and modeling of the constraints and bottlenecks that the current, and potentially future, mine would face.
An exhaustive industry wide technology scan was performed in order to understand what innovative technologies would be available for implementation at the mine site in the near term and their impacts on CAPEX, OPEX, Productivity and Implementation.
This data, combined with in-situ observations of the underground environment and an intimate knowledge of the current Life of Mine plans and Exploration plans, led to the design of a techno-economic model that simulated the mine production from all available zones and modelled the impacts of technologies on production, cut-off grade and most importantly, NPV. The model then identified how new technologies created new bottlenecks for the team to solve and address in the quest not for maximum throughout, but maximum NPV-based value.
While information available from suppliers is often focused on selling the impact of individual technologies, another insight from the modeling was that individual technologies lead to misplaced focus – as they often do not lead to the highest impact. Instead, this study looked at grouping innovative technologies into naturally occurring suites and assessing the total impact of the suites of technologies to the mine operation. The techno-economic model demonstrated that when innovative technologies are applied to an operation as suites of technology, the impact to the NPV resulted in an improvement in NPV by 50% over the Base Case LOMP, with an increase in CAPEX of only %5 versus the required sustaining CAPEX from the LOMP. Individual technology modeling would not have demonstrated as impressive results. We have shown that significant early gains in revenue offset any increase in cost, across multiple price, cost and processing scenarios, which the model also accounted for.
In this case, the impressive improvement was primarily achieved due to the impact on mining intensity and face utilization delivered by the technology suites. By looking at innovation in a holistic manner that took into account the theory of constraints, the impact of technology suites over machines, and the focus on NPV and value over production we were able to quantify a technology roadmap for an operating mine that led to a strategic reinvestment instead of closure.
To discuss how Stratalis can help you to define, develop and deliver your Technology Transformation programs, contact George Hemingway in our New York Office at firstname.lastname@example.org