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Aug 2009 - Innovations

Recent Innovations to Reduce Costs

In their presentation at Diggers and Dealers, Norton Goldfields (NGF) devoted some time to recent innovations that they have applied to reduce costs. When we wrote our (ERA) July 2009 Panoramic (PAN) report we referred to the significant cost and capex savings that Panoramic was achieving across its mines by up to $40mpa including the use of the new Sandvik 6-wheeled trucks at Lanfranchi.

In their Diggers presentation, NGF showed three methods of reducing overburden removal costs such as dozer-push at <A$2/bcm (pushing overburden into an older pit, to expose ore), trap-dozing at <$2.50/bcm (pushing overburden and then using conveyors over a distance of ~2km to move the waste into an older open-pit), and using scrapers (sometimes in tandem) at <$3/bcm to remove overburden above a new pit.

Norton estimate that the use of these techniques has reduced their usual costs of up to $9/bcm down to $2.50/bcm to $6/bcm, and have a target of reducing their costs to $5/bcm. Norton also showed in their presentation the use of an apparently Finnish method of moving excavators from one working area to another that reduces the travelling time from 4 to 5 days down to 4 to 5 hours, resulting in significant cost savings.

Basically as shown in the sequence of figures in Figure 1, the excavator drives onto a pair of wheels, positions its bucket onto the back of a truck, goes to its destination and drives off the wheels.

(Note the sequence of figures was taken while in the audience, of the video playing on the Diggers screen. It may also be seen that it was clearly a promotional video for “Sleipner”, and that the pair of wheels and background change between frames 1 and 2, while it is only in the last frame that the type of excavator also appears to have changed.) However, the principle is clearly there.

At Lanfranchi, Panoramic has replaced its conventional 6 x 50t trucks with 4 x 60t 6-wheeled Sandvik trucks, resulting in significant cost savings despite the $1.8m price tag per Sandvik truck.

The Sandvik trucks are ~60% faster (moving 270tkm/hour compared to 170tkm/hour) and do use ~15% more diesel. But two less trucks saves 10 people (8 operators and 2 fitters) and along with the fly-in/fly-out costs, Lanfranchi estimate that its annual truck costs have fallen by ~A$1.5mpa. Panoramic’s Savannah intends to buy one of the new 6-wheeled 60t Sandvik trucks in the coming year to June 2010.

There are undoubtedly a number of equipment innovations taking place to reduce costs, however, it is simply that the Sleipner and the Sandvik ones recently caught our attention.

Disclosure and Disclaimer: This article has been written by Keith Goode, the Managing Director of Eagle Research Advisory Pty Ltd, (an independent research company) who is an Authorised Representative with Taylor Collison Ltd, and with his associates, may hold interests in some of the stocks mentioned in this article. The opinions expressed in this article should not be taken as investment advice, but are based on observations by the author. The author does not warrant the accuracy or completeness of any information and is not liable for any loss or damage suffered through any reliance on its contents.

Figure 1. Norton Goldfield’s Planned Method of Moving ExcavatorsGDNaug09

  • Written by: Keith Goode
  • Saturday, 01 August 2009