ECONOMIC VIABILITY

Financial Reporting

The Business Controls Department was re-established in 2007. The company is in a growth phase and, as a result, there is a need to ensure that its financial controls are strong. This function involves following up on any financial control weaknesses identified internally.

Rössing is operating in a competitive environment and, as such, the focus on cost optimisation is imperative. One of the challenges being faced is raising the level of cost consciousness in the organisation. Reporting of actual performance compared against the planned output is one of the ways that this awareness is achieved.

After four years in which the company made little or no profit, 2006 and 2007 saw increased profits – with a resultant increase in company tax paid.

Value planning

Value Planning is a new department that was instituted at Rössing in early 2007 to provide ongoing assistance in identifying and achieving the best long-term production plan.

Since approval of the Life-of-Mine Extension Project in December 2005, Rössing has been working towards getting production back to the originally designed capacity, and has been investigating a host of expansion options. This requires a rigorous process for quantifying the value of various initiatives in order to prioritise projects and justify capital
expenditure.

The development of such a process and evaluation
tools was a core focus for Value Planning during 2007, together with ongoing assistance to all departments in the evaluation and approval of their projects.

The main challenges faced by Value Planning during
2007 were both the overwhelming number of initiatives or projects that required investigation, and the lack of a clear process, tools and skills at the company for prioritising and evaluating these.

The challenge was addressed by two key initiatives:

• Upgrading project evaluation procedures and skills on site to Rio Tinto best practice levels, and
• Launching a strategic production planning process to set the direction for expansion.

“2007 was a challenging year for Business Controls, as a majority of the team were new to Rössing. Consequently, the year was about obtaining knowledge of the business so that business controls could be allowed to contribute significantly
towards maximising financial performance
by creating long-term value through the identification, evaluation and persuasive promotion of efficiency and cost-reduction opportunities.”

JIMMY GWISAI
Manager: Business Controls

“A key challenge for Rössing in 2008 and going forward is the risk of an insufficient supply of critical inputs to the U₃O₈ process that could impact production. Immediate concerns are shortages of power and acid, with water an additional concern for expansion. Value Planning are completing the feasibility study for a new Acid Plant that will lower supply risk and cost of both acid and power through the utilisation of excess heat to drive a steam turbine. In addition, the Department is intimately involved with other initiatives geared towards ensuring power and water risks are mitigated.”

DAVE GARRARD
Manager: Value Planning

“The main focus in 2008 for Long-term Planning is to continue to upgrade the planning model so as to provide more accurate plans.”

TIM FOX
Manager: Long-term Planning

Planning and technical services: Long-term planning

In 2007, infill drilling in the SK (exploration area) and SJ (existing open pit) deposits took place at an increased pace. Unfortunately, this activity was marred by poor safety performance by the drilling contractor. Several steps were taken to correct this and improved performance is expected.

The feasibility study for the SK4 project is nearly completed, and mining in the area is expected to commence there in mid-2008. Drilling will move ahead at a rapid pace in both the SK and SJ areas in 2008, with added emphasis on safety in this operation.
The drilling techniques will be improved to decrease the turnaround time for uranium analysis, thus improving the planning process.