Confiance has been involved in the development of several bankable feasibility studies for both existing and soon-to-be miners. Most of you will know that a Bankable Feasibility Study (BFS) is a comprehensive forward analysis of a project’s economics (+/- 15%) to be used by financial institutions to assess the credit worthiness for project financing.

1. Newsletter – February 2013
Take it to the Bank
Over the last 18 months, Confiance has been involved in the development of several bankable
feasibility studies for both existing and soon-to-be miners. Most of you will know that a Bankable
Feasibility Study (BFS) is a comprehensive forward analysis of a project’s economics (+/- 15%) to
be used by financial institutions to assess the credit worthiness for project financing.
Arguably the most vital and certainly the riskiest element of any organisation/project is the people,
who ultimately will make it a success or a failure. Confiance understands the people dimension of
your business. Failure to adequately scope out the human resource requirements and risks in a
BFS will, as a minimum send alarm bells to your financiers, and at worst signal the death knell of
your project even in its embryonic stages.
Traditionally in the BFS, a huge emphasis is placed on technical aspects of the project, planning
out the purchase of capital equipment and engineering outlay. That’s fair enough, after all the
objective is to get funding. However, we believe that overlooking or providing lip service to the
people aspects of the project is a trap many organisations fall into. People costs conservatively are
between 40% and 50% of the total operating cost of a mine - remuneration, travel,
accommodation, training etc… And just because things like industrial disputes and labour turnover
are difficult to quantify in hard numbers, doesn’t make them any less real!!
The bottom line is that people are the pivotal point in every phase of a project, from exploration to
construction and operation. In simple terms, the effective manning of a mine is key, and as such
should be scoped accordingly.
Most organisations have the rhetoric down pat. “We put our people first”,” We have a high
performance culture”, “Our people are paramount, number one.” The rhetoric isn’t enough though,
either in a BFS or in the actual construction and operation of the mine. If you are serious about
“putting people first” or building a “high performance culture”, then convince the banks you can
deliver against this. It’s one thing articulating the fluffy vision, quite another thing turning it into a
reality. How to do it? Well the following tips might help.
Once you’ve got the words on the page about the vision and values, articulate the behaviours that
support this. Define the behaviours that your people will be held accountable for. The aim is for all
of your people to walk the talk of the vision. Otherwise it’s a waste of time, a cute set of words in a
picture frame somewhere that everyone forgets.
Develop an organisation structure which is geared specifically to achieve the business outcomes.
Don’t have a flat structure just because it’s flavor of the month – design the organisation that will
meet the business needs, but be mindful of creating silos and empires! The organisational
structure must show clearly defined roles and reporting structures, no ambiguities!
Once you have the organisation structure nailed, the rosters can be agreed. Consider the most
effective rosters to meet your productivity targets. Don’t forget to consider the impact of your
choice on attracting and retaining people. This is not just about your operational workforce. We are
seeing more innovative rosters in FIFO operations that will appeal to professional and leadership
Offices: Level 2, 11 Lang Parade Tel: + 61 (0) 7 3864 0500
MILTON QLD 4064 Fax: + 61 (0) 7 3864 0599
Email: info@confiance.com.au Website: www.confiance.com.au

2. Newsletter – February 2013
people who are hard to hang onto. No more traditional 5 and 2 rosters on remote commute mine
sites. These just exhaust and frustrate people, and finally force them into moving on.
Once you’ve locked in the structure and rosters, you’re half way home as these decisions drive a
lot of your cost estimates in the BFS – including remuneration, recruitment, training, travel and
accommodation.
Decisions regarding remuneration are critical. You need to land on a strategy that is consistent with
your vision. For instance, you’re not going to demonstrate that people are your number one priority
if you pay them below the midpoint in the industry. If you’re going to build that high performance
culture, your reward system should recognise high performance through bonuses and/or other
incentives. You can boost retention rates with cleverly designed bonus schemes that recognise
longevity of service and achievement of performance goals.
Don’t think the banks won’t be interested in your industrial relations stance either! Although not a
hard cost like remuneration, the downside of getting your IR processes wrong or failing to provide
strong decisive leadership could cost you the whole ball game.
Recruitment and training are big costs. Again, these need to support your vision. If you want to
drive a high performance culture you have to go out and find high performing people, or at least
people with the right mindset and ability to be trained. Commit $ to your recruitment and training
processes to align your workforce – have them start work with your company’s vision and values
tattooed to their foreheads!! This will ultimately save you a fortune on getting rid of the people who
either don’t fit or who then drag others’ performance down. Don’t forget about turnover costs in
your BFS. Industry turnover rates in 2012 were 24%. Costs associated with turnover vary
depending on the roles vacated, but for BFS purposes we suggest you budget 30% of total fixed
remuneration for the people you expect to turn over. If you predict you’ll have a turnover less than
the industry average, then you had better back your predictions up with believable strategies to
keep it low.
Accommodation of a high standard is one such strategy. High quality accommodation supported by
high quality facilities with great food is a biggie. This is a second home for your workforce - if it’s a
notch above what your competitors are doing, your retention rates will sky rocket. “Hot bedding”
may seem economically sensible for a start-up operation, but analyses often reveal that the longer
term cost in turnover outweighs the initial cost advantages, so be careful.
Fly-in fly-out (FIFO) operations are hot topics. Travel is the third biggest HR cost to be estimated
within the BFS. Exploration of departure and arrival hubs outside the usual avenues is becoming a
critical consideration, particularly when based in areas that are already congested with other mine
site travel. Getting in and out of Brisbane airport when you’re tired and keen to get into your own
bed is tedious. A smaller airport where air traffic is not so voluminous and processing time is quick
can often present an attractive alternative.
The HR component of the BFS should be a standalone blueprint for the human resource
management direction of the project; a usable document that allows an organisation to hit the
ground running with strategies, policies and procedures ready to implement. Carefully planned HR
decisions are the building blocks of the high performance culture aspired to in most organisations.
Offices: Level 2, 11 Lang Parade Tel: + 61 (0) 7 3864 0500
MILTON QLD 4064 Fax: + 61 (0) 7 3864 0599
Email: info@confiance.com.au Website: www.confiance.com.au

3. Newsletter – February 2013
Keep in mind the following 10 tips when thinking through the people dimensions of your BFS:
1. Clearly articulate your vision and values - what is it you are trying to build, and what
values and behaviours are you going to want to be measured against?
2. Design an organisation structure that will help you realise that vision
3. Develop work cycles that maximise both productivity and your attractiveness as an
employer.
4. Give consideration to elements of work/life balance such as rosters, accommodation,
camp facilities that will help keep turnover below the industry average.
5. Don’t undercut your recruitment and training spend – getting the wrong people will cost
you more in the long term.
6. Have a robust industrial relations strategy that identifies IR risks and mitigations.
7. Provide incentives both financial and otherwise for the attraction and retention of
workforce capable of making your vision a reality.
8. Explore travel and accommodation options which are consistent with achieving your
productivity objectives and your attraction and retention strategies.
9. Consider turnover as a real cost to the business and identify initiatives which will help
keep it at a manageable level.
10. Don’t put the people dimension as an appendix to your BFS. It should be chapter one!!
By Jo Westh
Offices: Level 2, 11 Lang Parade Tel: + 61 (0) 7 3864 0500
MILTON QLD 4064 Fax: + 61 (0) 7 3864 0599
Email: info@confiance.com.au Website: www.confiance.com.au