Capital Projects Symposium: The White Paper by CIM-ICM Publications

The White Paper R. Slack, P. Eng.

Canadian Institute of Mining, Metallurgy and Petroleum Institut canadien des mines, de la métallurgie et du pétrole

Introduction From November 2 to 5, 2020, 270 people from 13 countries came together, virtually, to talk about capital projects in the mining industry. What works and what doesn’t. We heard about lessons learned, case studies, new technology, and new ideas. From the feedback we received, it was a successful symposium in many ways. Thanks to our speakers, our sponsors, our delegates, and our CIM team organizers, it all came together. An important aspect of the symposium was looking for different ways to continue the conversation. This white paper is one way to do that. Its goal, to provide an overview of the symposium with key takeaways and observations. Just remember that the observations in this document are those of the author. The most important observations and takeaways are your own. R. Slack, January 2021

Contents Introduction

Facts & Figures

The Keynotes

Day 1

Day 2

Day 3

The Workshops

Project Evaluation and Financing

Risk

Open Mic

ESG and Projects

Project Execution Models

Call to Action

CPS 2021

Our Sponsors

Facts & Figures We had 270 delegates from 13 countries participate. There was a mix of EPCM providers, engineering consultants, academia, contractors and suppliers. There were 31 different mining companies represented. In organizing the event, it was important the mine owners were involved. As project owners, they ultimately benefit the most from improved project delivery. It was critical they were present.

270 DELEGATES FROM 13 COUNTRIES, 31 MINING COMPANIES AND 59 EXECUTIVES.

Perhaps a bit surprising and very encouraging, the largest cohort by occupation was Executives. Executives were classified as those at a VP level or higher. The classification “Director” refers not to board members but rather to those with a title – for example, Director of Engineering. The classification “Other” refers to CIM staff, media, academia, and delegates whose occupation was not readily identifiable.

The Keynotes The keynotes struck a chord with our delegates! We had great feedback on all of the keynote presentations. We intentionally provided a mix of large project experience including chairman of the board, an executive of a global consulting group, a senior executive operator miner , and finished up on Day 4 with a view from the financial sector. Here is a very brief summary of the four keynote presentations. Each speaker provided us with a great deal of worthwhile advice and takeaways.

ALL THE KEYNOTES STRUCK A CHORD WITH OUR DELEGATES

Day 1 Keynote Most Projects Today Struggle to Demonstrate Double Digit Returns, so what Needs to be Done by the Industry? Ian Pearce, Non-executive Director, Hattrick Resources, Chairman of the board, New Gold Inc. Ian started our symposium and his talk with a safety share. Planning, risk assessment, and sticking to the plan are important not only for project delivery but for workplace safety as well. Stick with your plan; if you deviate, you always add new risks.

CONTINGENCY IS NEVER A SUBSTITUTE FOR POOR DEFINITION.

Ian’s background encompasses a wide range of project experience from site engineering and management, through to the most senior executive role on billion dollar projects. In his talk abstract, he referred to the 5 factors critical to your project’s success. Here they are: 1 Build a team that has proven itself in building your type of project, not just study work. 2 Establish a comprehensive definition of the project. A useful tool is “the reporter’s questions”. You

should be able to answer all of these questions when it comes to defining your project - what, where, why, how, who, and when. Define, define, and define. If you don’t complete each stage before moving forward, you lose the logical sequence of the project. Take the time not to go forward. Contingency should never be used to make up for poor definition. 3 Establish the right project control systems. Using inferior systems for estimating, forecasting, or cost

control can hurt your project. However, no matter what systems you use garbage in means garbage out. Get your data right. 4 Understand the production drivers at each phase of a project. 5 Ensure your plan addresses not only engineering and construction but commissioning and ramp up to

production as well. Composite teams. It is like a relay race, how good are you at passing the baton?

Day 2 Keynote How Capital Project Engagement Can Become Your Insurance Policy to Keep on Schedule and on Budget

Pamela Hackett, CEO, Proudfoot Pamela focused on employee engagement, which gave us an early look into her upcoming book, Manage to Engage: How Great Managers Create Remarkable Results, published by Wiley and available on Amazon in 2021.

ONE, FIVE, THIRTY

Pamela began by letting us know that “the plan is chaos” and the goal is to smooth as much of the project into a plan as possible. There are many reasons that projects get off track. When it comes to people, it can be lack of skills, lack of motivation, or sometimes people just get tired. However, it is not about culpability, it is all about capability. You have to engage your people not just through the sprints but through the long haul too. Do you have a stakeholder engagement plan? Are you ready to engage, enable, and energize your people? Prioritize people. Connect with people. To do all this leaders need to be present, they need to be able to understand the data, they have to be able to coach, and they have to be influencers. Their ability to collaborate can be a performance multiplier. Pamela shared with us an engagement tool Proudfoot has implemented called 1.5.30, which is a very simple concept. Check in once a day, meet for at least 30 minutes once a week, and have a meaningful face-to-face interaction once a month.

Day 3 Keynote The Mining Project World – An Art vs. a Science George Greer, Senior VP Project Development, Pan American Silver Corp. George gave a great talk during the International Shaft Design & Construction Conference in 2019, and we were very happy to have him join us for the Capital Projects Symposium. George started with a safety share focused on continuous improvement. He then went right to work delivering some excellent advice for all of us involved in projects, starting with lack of engineering versus scope control. Projects with a relatively short time/budget for engineering inevitably blow the budget. So how much engineering is appropriate? It depends on many factors, but $1 in engineering usually saves $4 to $5 down the road. When it comes to project controls, scope control requires a change register that is maintained and up to date. No register means no control. Earned value tracking is good to have, but you must have an accurate actual schedule and costs that reflect value completed to date. Sometimes using an external firm for this will give you an independent view, it is always hard for your project manager to be unbiased. A risk register is needed from the outset. George then talked about the team. Get the best team possible. Focus on this, and know the people. Irrespective of how you setup your project, you need a core team of 10 positions; people you know well and that you know can deliver.

Additional takeaways: • During estimating and engineering, earth works and civils are often understated.

IT IS VERY IMPORTANT TO KNOW WHAT IS NOT BEING COSTED.

• Indirect costs need to be evaluated in detail. • Recognize escalation impacts. George uses 15% on most projects. • Underground work means scope growth, delays, and bad ground. Put allowances in your budget for all three. • For plant design, conceptualize as much as possible before going out to get consultants to design. Design for spills and upset events, space for cleaning, and maintenance. • Over design coarse material handling systems. • Involve operations personnel in the design process. • It is important to know what is not being costed. • Make timely decisions and never let a decision hold up the work.

Never chose a contractor based on 3 bids or price alone. You need to get the best team. Each firm has strengths and weaknesses, understand them and build your team accordingly. Select an EPCM group as follows: • Expression of interest. • Base on replies, shortlist to two. • Ask for pricing. • Meet with all the people proposed to determine if they will actually be on the project, and decide who has the A Team. Work directly with the selected group, in their offices or yours, to ensure timely decisions and that you get off to a clean start. There should be executive involvement from the beginning. Contract someone who has worked for an EPCM group before to help you understand how they work. An EPCM group is like a freight train, slow to start but once going you can’t stop it, so it is important to get off to the right start. The main purpose of the Project Manager is to make sure that all stakeholders are successful. Key factors for success: 1 Make a plan and stick to the plan. 2 Manage safety, scope, schedule, and quality and the costs will follow. 3 Treat your contracting firms fairly and with respect, and you will attract the best groups.

Keynote Day 4 It’s All About People - Adopt Pandemic Responses to Capital Projects and Manage the Capital Markets

Daniella Dimitrov, Partner, Sprott Capital Partners I looked forward to Daniella’s presentation which delivered a capital market view of projects, providing us some great observations and perspectives. Mining is a capital-intensive business with long periods, 10 years or more, from initial investment to returns. As much as 50% of total funding for mine exploration and development globally goes through the TSX. Daniella outlined seven themes that are worth revisiting: 1 Define your value creation strategy. Build it, de-risk it, and sell it. Clearly

communicate it. 2 Define your capital raising strategy. How will you fund the project at each

stage of development? Manage your share register and understand your peers/competition. Every equity dollar wants to be the last dollar in.

ALWAYS BE READY TO FINANCE.

3 Have enough capital to do the job right. 4 Know your capital requirements. Be open and transparent with your investors. 5 Always be ready to finance. Have the information ready to raise capital, which means keeping your

data room in order, having an up to date resource model, and NI43-101 information and reports. 6 Know your costs of capital and manage them. Lack of funding management can erode the project

value. 7 Be transparent. You can’t set unrealistic expectations. Choose the right team and build credibility.

In conclusion: • Rising commodity prices means capital dollars will be available. • Trust is a competitive advantage in capital markets. • The right team is required for good decision-making based on anticipation and forward looking. • Management and boards need to communicate more often to support good decision-making.

IF YOU HAVE A PROJECT, WE HAVE THE RESOURCES. Enjoy all of CIM’s online resources wherever you are. Be connected and be engaged.

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Day 1 Social Risk Management in a New Era of Global Activism John Seddon, Control Risks Just as we are starting to understand Environmental Social Governance (ESG), it continues to be redefined. Once focused on environmental, now the scope is much broader. ESG is not philanthropy, and mining knows that better than most industries. It is strategic, and akin to adoption of safety in the eighties. John gave us three tips: 1 Look at your risk register and challenge existing thinking. Look for opportunities. 2 Be very aware of the impacts away from the job site. 3 Be clear about the values that your ESG is based on.

Innovations in Project Leadership and Management Transformational and Adaptive Nermina Harambasic, O-Mod Nermina has observed that project development often results in segregation and siloes, and during execution, there is a major effort to establish integration and bring the team back together. She suggests a hierarchy of goals to prioritize, identify, and help resolve contradictory or conflicting goals. Nermina has developed an organizational model called O-Mod, which is focused on breaking down silos and fostering retention. Engagement of the wider team also helps better identify and mitigate risks and by doing so reducing risks. The owner, EPCM group and prime contractors are all part of the O-Mod project structure.

Nermina also presented a system called Transustain. The traditional sequence for a mining operation is ramp up - operation - turndown shut down. Transustain proposes an approach where instead of shutdown the operation goes into an expand/transform and sustain mode. This would be achieved by working in synergistic ways with local communities to form a new economic environment. She concluded by telling us, “the existing archetypes that business models are based on will have to change to include a wider range of risks.”

Key Lessons in Project Development and Execution Dave Stefanuto, Vale Dave started out by reviewing the influence versus time curve, emphasizing the importance of having the right inputs and making the right decisions early in a project. He then posed the question, “If we know this, why do we continue to make mistakes on projects?” Vale utilizes the Front End Loading (FEL) process, which is very well established within the company. Some of the challenges that Vale still faces in utilizing this method include a low level of involvement from Operations in FEL 1 and FEL 2, and a lack of structured discussions on business and project objectives during FEL 1. Dave went on to pose the questions, “are projects aligned with the strategic plan?” and “are they the right projects at the right time?” Vale is now focusing on a number of different approaches to project delivery, including collaborative approaches and Agile, and LEAN project management. There has been significant focus on process and systems, but Vale is now also focusing on developing people and is transforming into a successful leaning organization based on some key values: • Being obsessed with safety and risk. • Having open and transparent dialogue. • Taking ownership for the whole. • Developing people through empowerment with accountability and performance management. Dave talked about Google’s keys to a successful team. Who is on the team matters less than how the team members interact, structure their work, and view their contributions. The Vale Production System was presented as it applies to projects. Dave concluded by reminding us that “mastery comes with practice”, and Vale is on its way.

The Mining Misfits Jason Fearnow, Prime Contract Solutions As the name implies, “The Mining Misfits” is Jason’s approach at how to look at capital projects differently through engaging a myriad of industry representatives in discussing the challenges we face. He started by letting us know about the status of the capital projects market. Jason pointed out that many people know or feel there is a better way. He then went on to outline what he saw as some of the things that just aren’t working. Owner contractor relationships, a lack of accountability, and antiquated thinking are a few of the key challenges that we face. So what can we do to improve? According to Jason, rather than point the finger the first thing we need to do is look in the mirror. We have to learn to say no. No to unrealistic budgets, no to unrealistic expectations, and no to unrealistic commitments. Perhaps we need to learn to accept no as an answer too? The relationship focus has to be on Win-Win. Jason is on a mission to repair the damaged owner/contractor relationship situation in our industry. Getting better can be driven by collaboration and people speaking up, which is the premise behind The Mining Misfits. They are a group of industry leaders committed to making our industry better. Meetings are round table discussions on a monthly basis focused on different topics. One thing that comes up in every discussion is the lack of trust in our industry. This is foundational to productive and positive collaboration and relationships. A lack of understanding of each other’s drivers results in misalignment. Personnel retention and development is another key challenge. One of the main challenges is the concept of price versus value. A focus on price versus value impacts projects in terms of both cost and schedule. All of these topics and more will continue to be discussed by The Mining Misfits in hopes of building a better understanding of the challenges and potential solutions.

Day 2 Consistent Project Evaluations: Ensuring the Right Decisions are Made During the Front End Engineering Phase Cory Kosinski, Sherritt International Corporation Cory began by outlining some examples of cost overruns on major nickel projects globally. Metallurgical projects, particularly those with step outs from conventional technology, may require more time during the earlier stages of a project to allow for more accurate estimates to be produced that better reflect the final project. The presentation gave us an overview of lessons learned on various projects. Some specific observations included: • Establish a strong understanding early of the processing options and the selected approach. This means identifying your end product and the market you are targeting. • You can’t engineer bad chemistry. You must determine what chemistry to base your process on. Your process must support the chemistry and the equipment selection must support the process. • Define battery limits as early as possible, and avoid battery limit changes whenever possible. Ensure that all project phases are considered, including commissioning and ramp up. Engage stakeholders in this process. • Accurate and representative data is critical. Usually there is a lot of data available. The key is to determine what data is applicable to your current project. Often the largest escalation costs are location specific. • Use a consistent methodology in developing cost estimates allows you to compare various projects and helps in repeatability. • Base assumptions need to be well communicated.

Successful Project Experiences with Early Contractor Involvement Stephen Kou, Terra Nova Technologies, Inc. Stephen outlined some challenges that most if not all projects face at one time or another, lack of common goals among stakeholders, lack of clear project scoping early in the project, and a progression to adversarial versus collaborative relationships. All resulting in overruns and back charges. To address many of these challenges, an Early Contractor Involvement (ECI) approach is recommended. Involvement as early as possible, even at pre-feasibility stage, can help in establishing more accurate budgets and schedules as well as alignment between stakeholders. Trust and collaboration are central to this approach. The BHP Spence Project in Chile was a test case for BHP to see if an ECI model could be successfully executed in Chile.

The project was successful in a number of areas. There were no back charges, the overall schedule was reduced by 3 months, and the final lump sum EPC was lower than the GMP. As with most successful projects, a relationship of trust was established that would pave the way to future successful projects.

One of the major benefits of an ECI approach is the ability to apply modularization and offsite pre-assembly. This approach can reduce costs and help compress the project schedule. By reducing the on-site work going on concurrently, the approach also reduces risk and improves safety. Various case studies of projects utilizing modularization were presented. The use of 3D engineering tools helped in this approach.

How do you Estimate the Influence of Innovation & Technology Enhancements on Mining Capital Projects? Roy Howes, Fluor Canada Ltd. Roy started out with an interesting reference from Dr. Ken Hudson, “Unless we measure innovation it may not get done.” Some examples of innovation currently in use were presented including EPC project health diagnostics and 3D model direct transfer to construction vehicles. AI is being used for plant optimization, integrating steel design with detailing, and generative builds. VR tools are being used as well as digital twining. These are all innovative practices that are available and help projects. The reality is that vast amounts of data are presently available, and innovative tracking systems can align data collection to utilize data. AI can analyze data and help optimize operations. All of these examples are a segue into the primary question of the presentation, “how do you estimate the influences of new technology and innovation?” First of a kind technology has no historical data for reference purposes and most likely requires a new execution and construction approach. Also, with no historical data it has no relevant benchmarking. The “should cost” approach allows a comparison between new technology and well-established options. Benchmarking on a should cost basis uses a set of detailed criteria to ensure cost comparisons are valid. In the example shown, a Ropecon conveyor versus an overland conveyor system, the comparison had to go beyond cost and take into account the environmental footprint and risks as well. Estimating is holistic, where the results are greater than the sum of their parts. Estimates need to take into account the capital, sustaining capital, closure, and operating costs to reasonably evaluate options using a net present value approach.

Diverse and Inclusive (D&I) Design Diverse and Inclusive (D&I) Design Laura Twigge-Molecey, Hatch

Laura provided a good overview of Hatch and their Diversity & Inclusion (D&I) programs and plans. She then gave a few examples of revised designs that made work easier for all employees and reduced injuries. Suspended tools and revised valve designs reduced the heavy lifting type of work and in doing so expands work opportunities to all. General considerations for D&I design include: • Remote operating centers.

• Dedicate spaces for special purposes.

• Increase instrumentation.

• Elevators.

• Gender neutral change rooms.

• Maximum lifting adjustments.

• Address language barriers.

• Alternative methods to manual.

One tool Hatch is using now is a design review checklist, which prompts the design teams to consider aspects of D&I design. In terms of project execution, Hatch has made their commitment to D&I clear - “A staffing plan is strongest when diverse points of view are included at multiple levels of a project. The staffing plan shall reflect diversity of thought by including people from different groups. Diversity can be seen through age, gender, origin, ability/disability etc. of the people.” In a recent workshop on D&I design, a few key takeaways were presented: • Make decisions at the appropriate time. • Use technology to our advantage. • Consider the future workforce early.

Day 3 Overcoming Brownfield Project Delays with Innovative use of Tech Eben Vissor, DRA Global Eben gave us an overview of the Sierra Rutile operations based in Sierra Leone, which is one of the largest rutile deposits in the world. The main uses for rutile are the manufacture of refractory ceramic, as a pigment, and for the production of titanium metal. DRA was working on a number of projects for the operations. These were EPC projects with values ranging from $11M USD to $64M USD. The largest project, the SRL Expansion Project, was completed in August of 2019.

All projects are constricted in some way, but the SRL projects had some unique constraints. The construction camp had a limited capacity of 105 people, the Government required substantial local content and hiring, and the logistics of shipping were all constraints above and beyond typical projects.

Past experience with commercial shipping, in terms of delays and equipment damage, drove the project to employ charter shipping to better ensure delivery and quality. This was reducing shipping time from 40 days to 21 days and had other benefits as well. DRA elected to employ a number of new technologies on this project, including modular design and construction, integrated 3D design and fabrication, digital communications and document management, high-precision 3D capture and analysis, and 4D schedule planning and monitoring. Previous lessons learned benefitted the project but there were still some delays as other “unknownunknowns became project reality”. One ship was arrested at port due to a dispute with a previous client resulting in a 15-day delay. Another delay was the result of community unrest and a work stoppage lasting 10 days. In total, there were delays of 33 days on an 11-month project schedule, which presented a real challenge to the group. In the first 3 months of construction, the majority of the delay time was made up, primarily due to offsite modular construction, which really accelerated the build. Practical completion of the project met the original baseline schedule. The projects were completed with no lost time injuries. Lessons learned include: • Focus on simplicity in design helps improve constructability and schedule. • Integrate planning across all project phases. The design and construction teams’ information need to exist in the same areas and same degree of detail for all phases. • If you are relying on technology, you need infrastructure and support. Systems training and support will benefit the project. • Perfect is the enemy of good. Effective and timely decision-making is critical. • Transparency and risk sharing results in innovative ideas and increased performance. Fair sharing of risk and reward. • Quantify and measure the cost of digitization and include it at the start. The future holds some new tools and trends for us. Digital design, materials of construction, high-definition scanning and surveying, vertical integration of the supply chain, modularization, and 5D and 6D BIM are all on the horizon or in use and will continue to provide benefits as we gain experience.

Meliadine Project Management Daniel Seguin, Agnico Eagle Mines Daniel has been with Agnico Eagle (AE) for 12 years and has always been part of the projects team. At Meliadine he was the Engineering Manager. Daniel started by saying, “Understanding that every project has its own reality and no project is identical, this is our way of doing things.” It was noted the project was approved at 60% engineering complete and this level of engineering benefited the project during execution. An existing exploration camp was utilized to bring in early construction crews until the main camp was complete. The ground is permafrost so this needed to be taken into account in all engineering designs.

AE approached this with a full owner’s team running the project. All elements of the project were run by AE managers with the project office located in Val d’Or. The future mine general manager was part of the team from the beginning so there was operations input early. The project team’s focus was to always take the best decision for the project. “Let’s make it happen together” was a project slogan and is now widely used by the company. The formal steering committee met every 4 or 5 weeks, and there was total transparency.

AE approached the contracting and construction as partnerships. This was done through risk sharing contracts based on the target price model. Each contractor had interest in having all other contractors perform well, and the focus was on execution and eliminating distractions. AE looked at the project control process and how it sometimes impacts the ability to realize opportunities. Controls need to be in place but time must also be allowed to seek out opportunities. The construction manager was able to forecast a few months ahead, which provided the chance to look for opportunities. With a $1M-a-day burn rate, the impact of commercial issues could be significant and were avoided whenever possible. Agnico Eagle’s ”recipe for execution” was 60% engineering complete at time of approval, self-perform where possible, and rules of credit to track progress.

Daniel listed the following success criteria: • Plan one year in advance. • Close buildings before winter. • Do not work against the elements. • React and adjust the plan before having to face the issues. With a very limited shipping season, it was critical to “do the right thing at the right time”. The procurement and expediting strategy was well thought out with a team dedicated to this important part of the project. Procurement status reporting and expediting status reporting were utilized successfully. The commissioning was recognized as an important part of the project. It was approached as a joint venture between operations and construction. Operators were part of the construction team so they could take ownership as soon as the facilities were built. According to Daniel, “Our approach has given time for flexibility and leaves time for the construction team to complete their job and commission in parallel and have the operators be part of the team.” Even though every project is different, there are basics and guidelines that should not be waived no matter the size, location, or context of the project.

The commissioning was recognized as an important part of the project. It was approached as a joint venture between operations and construction. Operators were part of the construction team so they could take ownership as soon as the facilities were built. According to Daniel, “Our approach has given time for flexibility and leaves time for the construction team to complete their job and commission in parallel and have the operators be part of the team.” Even though every project is different, there are basics and guidelines that should not be waived no matter the size, location, or context of the project.

Project Commercialisation – Using Operational Readiness to Transition from a Project to a Successful Operation Christopher Biel, PPAIP Consulting Inc. Chris presented on why we need to consider the concept and a framework for delivering Operational Readiness (OR). This presentation complemented previous presentations that already highlighted the importance of this phase of any project.

We do projects to add value to our business from sustaining capital, to major plant upgrades and technical changes, to greenfield where we build new mines and plants. The variety and complexity of our projects vary substantially. The challenge is integrate our project into our operations while we continue to operate. It is very important for OR to have engagement from all our stakeholders. “To achieve the planned value we need to think beyond the traditional asset based scope.” Three key questions: • What is the project supplying? • What are the needs to startup and operate the asset? • What are the needs to commercialize that asset into a profitable enterprise? OR needs to be treated as a sub project. Build an OR scope, identify risks and opportunities, and then go into detailed planning. So what activities do we need to achieve the desired results? It is more than a technical solution; to be sustainable it also requires operator and stakeholder ownership and engagement. OR is key to achieving full project value. In some cases up to 40% NPV is at risk through a combination of OR influenced losses. Takeaways: • Project success is a fully commercialized project. • No surprises at the end. OR should be planned as part of the overall project. • OR helps protect the project NPV. • Success = technical solutions x engagement and acceptance. • Use lessons learned, peer, and cold eyes review.

Challenges to Engineering and Constructing a 4.7 km Ropecon Tiaan Hoogenboezem, DRA Global The RopeCon conveyor at Booysendal links the Booysendal Central shaft complex with the existing Booysendal South Concentrator Plant. The RopeCon is a 4.7 km long conveying system, spanning over rough terrain and gaining 500 m of elevation from tail to head. At one of the valley crossings, a massive 800 m span was installed between towers. The project kicked off in 2015 with a proof of concept study where multiple technologies and solutions were evaluated. The RopeCon option was selected and the project received full approval in 2016. Successful commissioning took place in December 2018 and final optimisation settings completed January 2019. Booysendal Platinum is located in South Africa. The terrain includes a river between the production area and the processing facilities. The required route to transport ore included traverse over, around or under the river and up the mountain. A traditional conveying system was one of several options evaluated within the initial tradeoff study work.

The haul road option had the lowest capital cost profile but carried environmental risks and issues. The aerial ropeway system (ARS) option mitigated these environmental issues and became the more attractive option. Based on this concept review the team began investigative studies as to what types of aerial ropeways are in use and would be applicable to the project. The RopeCon option began to look attractive as it was simpler than an ARS and had a smaller loading and unloading footprint, and could handle up to 1200 tonnes per hour. Based on the next stage evaluation the capital cost of a RopeCon versus an ARS were very similar, so the cost component was not a key part of the comparison.

The scope included silos, feeders, the RopeCon, and 12 towers to support the system. The highest tower was 59 m. In addition to traditional regulations the project also required permitting from the aviation authority. Logictics was a critical element of the project with 144 containers of equipment in addition to rope reels and belt racks. The system was successfully commissioned quickly and to capacity on schedule.

COVID-19 Impact on Projects Dr. Mohamed Dali, Hatch In addition to the obvious impacts of Covid-19, other potential impacts to projects include supply chain disruption, equipment delivery impacts, productivity impacts, additional indirect costs, schedule impacts, and in general added cost impacts. We have seen some positives, such as reduced fuel costs and reduced travel for those who can stay at home and support the project. Equipment delays of up to 12 weeks have been experienced. Shipping delays are common and transport companies are not able to guarantee delivery schedules. Although it is now a global and well-known event, it is causing confusion in contract administration and claims management where existing contracts did not deal with the specific issue of such a pandemic. For new contracts, negotiations are being delayed/extended to deal with these new situations. Hatch surveyed over 90 projects around the world and saw that less than 3% of those projects saw a significant impact to engineering schedules. Project schedules were impacted much more. Sixty percent of the projects saw delays in construction and some projects saw complete shutdown of activities. In a detailed analysis of these projects, Covid-19 induced productivity losses of 8.3% were calculated based on a wide array of delays and impacts, including training, screening, quarantine, and other factors. Schedule rotations added additional impacts of up to 12% for a combined impact of 20% on productivity. Measures adopted by Hatch to minimize impacts of Covid-19 included the following: • Virtual connected teams using MS Teams, Bluebeam Studios and Miro. • Continuous 24 hour engineering over global time zones. • Modified contract and supply chain strategies. • Site labour reductions to deal with reduced camp space and other restrictions. • Proactive early identification of risks and mitigation strategies. • Plan for virtual team support.

The Workshops Project Evaluation and Financing Notes provided by session lead Vikram Jayaraman of DRA Global The following are key takeaways from the group’s discussion: 1 It was interesting to note why and how some companies get their Feasibility Studies (FS) right, and

their recipe for success synthesized into tangible activities undertaken in the FS stage that set apart success stories amidst a red ocean of projects gone wrong. 2 Project overruns are not new and the industry hasn’t caught up to fully addressing this. Industry insularity

and lack of integration of best practices from other industries such as O&G and Pharmaceuticals, as examples of industries with multi-billion dollar project builds every year, Engaging, learning, and brining knowledge from such industries will help address shortcomings we encounter in estimating projects in mining FS. 3 FS should be seen as the last real opportunity to set-up the project for successful execution. A good

FS turns assumptions to facts. The boards of responsible companies should instill the discipline to go slow in FS and to go fast in execution. This in turn would require the mining organization to be clear with its inherent capabilities, get its delivery model right, and salt and pepper the organization with right expertise to integrate and collaborate in the FS. 4 A FS can only be a good platform for unlocking and enhancing value for the project if the preceding

phases were indeed used for finalizing the scope definition. 5 Only if these elements are followed correctly will we, as an industry, recoup the faith of investors and

help shed the image as an industry of poor capital allocation and value destruction.

Risk Notes provided by session lead John Seddon of Control Risks - The mechanics of getting stakeholders aligned on risk assessment – i.e. how can one actually go about carrying out a meaningful assessment? - Most experience related to project risks (e.g. resourcing etc.) as opposed to what I typically look at (i.e. ‘above ground’). - How does a project interface with the broader company’s approach (seemed to be limited existing understanding of enterprise risk management framework).

RISK WAS OFTEN SEEN AS BEING SYNONYMOUS WITH INSURANCE.

- Experience of attendees was that risk was often seen as being synonymous with insurance and that when risk was dealt with, it is via insurance. Facilitator commented that this is by no means unique to the mining and metals industries. - I shared experience of how perception and previous experience is often a key factor in how projects’ above-ground risks are assessed. There is likely appetite for more discussion on this topic – as much on the ‘how’ and soft skills and techniques necessary as the ”what”.

Open Mic Session leads Jason Fearnow and Roy Slack. Notes provided by Roy Slack Jason Fearnow and I hosted an open session that was meant to encompass any and all things project related, whatever was on people’s minds. We started with a short presentation by myself entitled “The Captain’s Sister” which provided a fictional overview of a project gone wrong with lots of obvious lessons learned for the taking.

GETTING THE PEOPLE RIGHT IS WHERE THE MOST VALUE ENHANCEMENT LIES.

My notes of the discussion are sketchy because I was an eager participant, but some highlights include the following: • Contractors have to learn to say no, but still stay in business. Owners need to be able to accept no for an answer sometimes. • When projects go wrong, where do they start to unravel? Right at the start. Emotional decision making is dangerous. • Create a line of defense, a value assurance group to do cold eyes review and provide unbiased feedback. • How are we managing information these days? We have a great opportunity to leverage data to our benefit in forecasting, estimating, project, and performance management. Key question, “does it add value or erode value“? • Consider operational readiness at the start of the project process, not as you approach the handover to operations. Must consider it as a project on its own to deal with the challenges of ramp up to nameplate. • Key people, project managers, project engineers, are in short supply. Who can invest the time and dollars to train people in these areas? When we see a large number of people on a project management team we must ask ourselves, “do those additional positions add or erode value”? • Lack of experience at the owner’s level when it comes to project oversight and management. Too many layers, reports. • Alliance contract styles can be a benefit but different companies handle them in different ways, some know how to run one, others don’t. Contractor evaluation is an issue; lack of trust in the industry is an important issue. • Getting the right people on the project is where the most value enhancement lies.

ESG and Projects Notes are from the presentation given by workshop Lead Chelsie Klassen of Hatch. The participants were presented with a basic question ”What does “”good”” look like to you?” What are the best practices to reduce stakeholder resistance and promote environmental sustainability? According to John Ruggie of Harvard, “73 percent of all project delays are caused by “above ground” issues – most notably stakeholder resistance instead of technical issues.” Environmental Social Governance (ESG) is more than the right thing to do. However, is there a real guideline out there for mining companies to follow? Actually, there are many. IFC, Equator Principles, UNESCO, are some of the many “playbooks” including of course TSM from the Mining Association of Canada as well. When it comes to ESG, employees expect it, consumers demand it, and it attracts and retains investors, and reduces project delivery risk.

“73 PERCENT OF ALL PROJECT DELAYS ARE CAUSED BY “ABOVE GROUND” ISSUES – MOST NOTABLY STAKEHOLDER RESISTANCE INSTEAD OF TECHNICAL ISSUES.” John Ruggie, Harvard

Examples were presented where stakeholder opposition significantly delayed projects. An example was given where stock value deteriorated by 20% due to social unrests, and this was during a period where the S&P increased by 35%. Opportunities to add value exist at every stage of a project but can be limited if ESG is not considered from the earliest stages.

Project Execution Models Notes are from the presentation given by workshop Lead Ken Murray of Captrics. Ken started by introducing the workshop topic as follows ”With the realization that current project execution models are not performing as expected in the current project circumstances, many stakeholders in the mining project space are looking for alternative project execution models to achieve more certainty on outcomes. This workshop is intended to provide an open forum for discussing the current challenges, the various alternatives on offer, their applicability, and past experience.” He then asked whether anyone remembers “drawing offices” in the mining houses. Personally, I remember as late as the early eighties, both INCO and Falconbridge having internal engineering groups, which handled project design work. Ken then provided an overview of the cyclical nature of the industry. The natural question was, “how do you justify large engineering groups during down turns when there is minimal project work or capital for projects?” The answer was to outsource project work, which seemed like a great idea financially, resulting in less waste and reduced cost. Ken then reviewed the progression from in-house project teams to an EPCM model. As competition increased between EPCM companies, and mergers and acquisitions continued to emerge between these companies and mining houses, there was also a corresponding increase in project failures. This resulted in what Ken termed a higher and fire approach for both EPCM and contractors as well as experimentation with various contract types and EPC services.

The challenges between an owner and partner structure for project execution were reviewed where poor skills and project problems lead to an erosion of trust in the industry.

Various alternative models for project execution were listed for consideration, including EP & CM, Process Island, EPS, Design / Build / Operate, Collaboration, Alliancing, IPD, Integrated Owners Team, SelfExecuting, and Gig Consultants. The floor was open to the key discussion points, those being; what works, what doesn’t, and what are your experiences and references. A general discussion followed.

Call to Action Your CIM Capital Projects experience is not over! Schedule a meeting next week with your colleagues. Share some of your key takeaways from the symposium and this whitepaper. Consciously look for where you can apply what you have learned. If there are some things that resonate with you, reach out to that presenter or workshop lead. Start a conversation. Network, and share your takeaways and findings with them. Keep the conversation going.

CPS 2021 The Capital Projects Symposium was a great success and a foundation we can build on. The next one will be new and improved and hopefully will encompass both a virtual and an in-person format. Delegate and sponsor feedback has been very beneficial and will help us make CPS2021 bigger and better. Present, sponsor, exhibit, and attend. A save the date notice will be out in 2021, look for it. I hope to see you there.

Our Sponsors Our 17 sponsors made it possible to put on this event at a reasonable delegate fee and we are very appreciative of their support. These groups sponsor many events and worthwhile charities and their contributions are important to our industry.

Canadian Institute of Mining, Metallurgy and Petroleum Institut canadien des mines, de la métallurgie et du pétrole