Accurate production reporting is used to quantify the performance of processing plants, such as recovery and waste. It is also used to establish an accurate estimate of inventory. If there is a large discrepancy between actual and estimated inventory, there can be significant financial consequences. Poor estimation of recovery and losses can hide process issues and affect production planning.
A sophisticated and purpose-built solution will help a mine achieve zerobased budgeting – where forecasts and budgets require a revised mix of cost and revenue estimates rather than using historical results, plus or minus a few per cent. Estimated production and processing costs are therefore based on cost drivers that have been derived from the physical production activities and the physical characteristics of the waste and ore material to be processed at that stage of the life of the mine.
In 2017, a global mining organisation released the findings of a public investigation into their production accounting that found that copper cathode production in 2014 had been overstated by 6,650 tonnes. This was equivalent to overstating financial performance by US$41.9 million. It was also found that in-process inventories were overstated by US$122 million.
Accurately capturing the mass of concentrate produced is crucial when planning shipments and performing financial activities. Over-estimation of the concentrate stock can result in an over-estimation of the financial value of the concentrate within the plant.