afe - flow meters

8/12/2019 AFE - Flow Meters

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UNCONTROLLED COPYFile: This form is valid for 30 daysafter the date of print

Print Date: 11/06/14

ABOSSO GOLD FIELDS LTD DAMANG MINEAPPLICATION FOR EXPENDITURE (AFE)

Document No: AFE- GFGL - [Project]Document Owner: [Damang Goldmine]Revision No: 0Issue Date: [10-03-2010]Page: 1 of 13

INSTRUMENT FLOW METERSAPPLICATION FOR EXPENDITURE

Approvals Name Signature Date Signing For

Originator (Sponsor) Lourens Steenekamp Integrity of application

Head of Department Christo ViljoenTechnical and BudgetApproval

Environmental Manager Francis Nyame Environmental Acceptance

HR Manager Charles Klutse HR Acceptance

Unit Manager: Capital & Cost Control Gary Hamann Capital Control

Financial Manager Gabriele Decina Financial Acceptance

Manager Mining Gareth Phillips Approval

General Manager Alfred BaakuFinal Approval(see appendix CApprovalFramework)

Head of Finance: Ghana Nico De Lange Recommendation

Head of Finance: InternationalOperation

Johan van den Berg Financial Acceptance

Executive Vice President and Head of

the West Africa Region Peter Turner

Final Approval

(see appendix CApprovalFramework)

Executive Vice President: Head ofInternational Capital Projects &International Technical Services

Ben ZikmundovskyFinal Approval (see appendixCApproval Framework)

CFO Paul SchmidtFinal Approval (see appendixCApproval Framework)

CEO Nick HollandFinal Approval (see appendixCApproval Framework)


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SAP Project/WBSNumber

Sub Project Numbers

Project Title INSTRUMENT FLOW METERS

Funds Requested for this current AFE Requested Timing of Expenditure (US$)

Expenditure Type Total (US$) Current Year Current Year +1 Future Years

Capital 27,152 27,152

Working Capital

Total

Operational Plan

Variance

Note: The AFE amount excludesVAT but includesWHT and contingencies.

Budget Substitution:Substituted Project ID Substituted Project Plan (US$) Cancelled

Deferred

Note If this Project is unbudgeted, then a budgeted project(s) must be cancelledor deferred, so that the Annual Capital Expenditure ofDamang does notexceed its Annual Operational Plan. These Projects must be nominated above, with reasons given why they can becancelled / deferred in attached documentation.

Execut ive Summary:

This AFE seeks the approval to procure flow meters for various important plant applications for the followingreasons:

- Critical spares for existing essential flow indication closed control loop systems, for example the SAGMill Dilution flow measurement, which is essential for controlling the density in the milling circuit

- Replacement of existing flow meters, which fulfil important roles various control and machine monitoringapplications and are no longer giving reliable service in terms of accuracy and erratic readings.

- Various applications in the plant can be greatly improved just by the fitment of flow meters. Exampleslike the elution circuit, whereby the efficiency of the elution circuit can be directly coupled to the speedwith which the liquid is pumped through the circuit, gas flow measurement on the main gas line for theElution Heater to determine gas consumption as well as the correct operation of the Elution heater.These applications and several others can be notably improved by the fitment of flow measuringinstruments.

All three the above instances do not require vast amounts of funds to be committed to make aconsiderable improvement in various applications in the plant and should be a factor to be kept in mindwhen considering the approval of this AFE.

Phased Projects

Funds Requested for this project AFE Requested Timing of Expenditure (US$)

AFE requests: Date Approved Total (US$) Current Year Current Year +1 Future Years


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Previous AFE request (1) 27,152 n/a n/a

Previous AFE request (2) n/a n/a

Current AFE Request

Total AFE request to date n/a n/a n/a

Anticipated future AFE requests

Total Forecasted AFE requests tocomplete project:

n/a n/a n/a

Comments on Previous AFE requests and anticipated future AFE requests:

Note: The AFE amount excludesVAT but includesWHT and contingencies.

Project Financial KPIs

Discount RateUsed

Financial KPI Hurdle Rate Satisfies Hurdle RateCriteria

NPV (US$000s)

IRR (%) Yes No

Payback Period

Asset Category Justification Category (refer to definition document) Priority Band

Property, Plant & Equipment Cost Savings Productivity Improvement

Mine Property & Development Environmental Reclamation 2

Exploration & Evaluation Exploration Research & Development 1-5

Technology Health & Safety Resource Development

Increase Capacity Mine Acquisition

Maintain Production Level Other

PriorityBands

1.Absolutely critical: Operations will cease or we will loose our licence to operate2.Essential: To improve margins3.Capital for future: To extend life of asset4.Other: None of the above5. Corporate (Capital based on corporate projects)

Basis of Cost Estimate

Capital Total Cost Estimate BasisBreakdown Cost (US$) Firm Pricing % Budget Pricing % Estimated %* Total %


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Purchases 27,152 27,157

Internal Labour

Other

Contracts

Total

*Type of Estimate(preliminary, detailed, definitive, etc).Providesupporting documentation in anAppendix.

Preliminary, with quotes attached

Consequential Operating Costs (US$)

Change in Working capital (inventory, spares, etc.)

Scrapping / write off of existing assets and inventory Scrapping / write off of maintenance equipment

Sales of existing assets

Rehabilitation work

Impact on existing facilities financials

1. VAT / Ghanaian Withholding Tax

Yes NoIs this expenditure, or part thereof subject to local VAT and / or Withholding taxes

If YES, you must include WHT in your AFE capital requisition

2. Import Duty

Yes NoYes No

(a) Does the capital item include imported components?(b) If yes, has the Ghanaian Mining List been consulted for items exempt from Import duty?

3. Royalty Payments

If the expenditure includes a royalty payment for technology licenses and use of know-how, direct to anOverseas entity/addressee, has Gold Fields Taxation been advised? (for potential withholding taximplications)

Yes No

4. Research & Development (R&D)

Yes NoWill this Capital item be used as part of an eligible R&D project?(If yes, it will be concessionally depreciated as R&D plant)

5. Effective Total Life

Yes NoIs the estimated effective total life of this Capital Item (i.e. time it is expected to be functional and inoperation), less than or equal to 3 years? (If yes, it will be eligible for 100% tax depreciation)

6. Foreign Currency ExposureCould the cost be affected by an exchange rate change between $US and a foreign currency?If yes, has Gold Fields Treasury been advised via a currency exposure advice form?

Yes No

Yes No


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Exchange rate exposures

Detail list of items in foreigncurrency

ForeignCurrency

CurrencyAmount

Exchange rate use forplan

US$ Amount Forward coverreported to Head ofFinance: Ghana

Euro 1897.64 ? ( Qty ) Yes No

Yes No

Yes No

Yes No

Yes No

Yes No

Timing o f Exchange rate exposures

Currency Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun CurrentYear

Timing of Exchange rate exposures

Currency Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun CurrentYear +1


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Project Cost

Details of Expenditure

Activity / Item Cost (US$)

1 Order and Delivery 27,152

2

3

4

5

6

7

8

9

10

11

12

13

14

15

Sub-Total 27,152

Transport

Import taxesWHT

Forex exposure

Contingencies (10%)

Engineering & Project Management Fees

Total Expenditure

Month Jul 10 Aug Sep Oct Nov Dec Jan 10 Feb Mar Apr May Jun Total

Cash flow 27,152

Month Jul 11 Aug Sep Oct Nov Dec Jan 11 Feb Mar Apr May Jun Total


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Background:

Provide relevant background information that would help senior members of management, not as familiar withthe project, understand why it is important to the Company. Provide meaningful information that may impactthe decision on whether to fund the proposed project. This section should also provide a more detaileddescription of the problem or opportunity that is being addressed by the AFE.

Flow measurement is a very essential part of closed loop control systems, machine monitoring and safetycircuits to protect major equipment like the crushers and mill lubrication oil circuits, as well as the monitoringof processes, to enable us to improve the process efficiency and predict failures on pumps, valves and othervariables in pumping circuits.Kindly see the attached list, which indicates where the process demands flow meters.As mentioned before, several applications are equipped with flow meters already, but no spare parts exist.This will lead to down time in may cases, should a flow meter fail. In some cases, the original flow meters arestill in the circuit, which were fitted in the original construction of the plant.

Its been observed that much time is spent to get to the bottom of a problem in the Elution circuit with

regards to f low. Since in the mining industry every second of t ime represent an ounce of g old. It

wou ld be appropr iate to have such s ystem in p lace to help m aintenance and product ion crew to be

more sm arter . At the moment current con sump t ion of an Electr ic motor coupled to a Mechanical

pum p is used to determine or judge the performance of the pump e.g. high current cons ump t ion is

interpreted as ef f ic ient performance of the pump. This high current consumpt ion e.g. could be a

bearing fai lure or som e other restr ict ion in the circui t . Before an aggrement is reached down t ime has

taken plac e.


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Proposed Solut ion:

To install flow meters at certain points in the lines.

Clearly describe how spending the proposed funds will solve the problem or exploit the opportunityidentified in the background discussion. This includes indicating how the funds will be spent (scopeof works), technical justification, who will perform the work, the level of confidence in the cost andbenefit estimates as well as identified risks associated with the project. For business combinations,this section should include a summary of the terms of transactions.

The project will address the following issues:Spare flow meters for essential applications will ensure the shortest possible downtime, in case of

the failure of such equipment.The replacement of suspect flow meters and the addition of flow meters where machine lubricants &liquids are not monitored, will directly influence the prevention of machine failures as it ensures theearly detection of oil not circulating in lubrication circuits, pumps running dry due to leaks, closedvalves, blocked pipes, dirty strainers and various other factors leading to machine failure.It will also address the efficiency of the elution process, by fitting a flow meter in the elution liquidcircuit and a flow meter in the gas line, to help eliminate the problematic elution process.

1. Give clear indication of pump performance.

2. Give clear picture of any valve leaks in the circuit.

3. Help reduce down time by taking quick action when in doubt of equipment performance.


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Alternat ives Cons idered:Status quo:

To leave the situation as it for now.


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To fully understand the merits of the proposed project, management must understand why this is thebest possible solution out of the alternatives considered. By clearly and concisely describing thevarious alternatives and why they where ultimately rejected, the AFE will demonstrate that athorough evaluation has been conducted and lend credibility to the recommendations. The option ofmaintaining the status quo (i.e., to continue with current practices) should also be included. In someinstances, alternatives are rejected because they do not provide the best return. If so, provide thesame level of detailed analysis, including critical assumptions and risks, which accompany therecommended solution.

Much t ime is w asted before get t ing to the route of a problem or faul ty equipmen t.

Equipment is lost withou t any signage or record of performance.

Monitors are important to give c lear indicat ion of p erformance.

Schedule:


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- List the key milestones/ work breakdown structure with the associated start and completiondates.

- Attach a Gantt chart to this page as appropriate.

Appendix AAdditional Information


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1. Design

2. Layouts

3. Scope of work

4. Drawings

5. Quotations

6. Estimates

7. Studies performed

8. Draft contracts

9. Schedules

10. Key Stakeholder Analysis

11. Risk Register/Assessment

12. Other Supporting documentation & correspondence


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Appendix BCapital Approval Framework

ITEM ACTION ACTION/VALUE RECOMMENDED BYFINAL APPROVAL

REQUIRED

2.2.3 Budgeted Capitalexpenditure GhanaIndividual AFE value Note 4 < US$2 million Mine Exco member

and Financial ManagerOperation

General ManagerInternational Operations

US$2 to US$4 million General ManagerInternational Operationsand Local Head ofFinance

Vice President Ghana

> US$4 to US$6 million Vice President Ghanaand Head of FinanceInternational Operations

International Opco

> US$6 to US$15

million

International Opco GFL Exco

> US$15 million GFL Exco GFL Board2.2.4 Change of scope and / or Cost overruns

Where the scope change or forecast cost overrunis greater than 10% of the AFE value as approvedabove OR greater than US$2 million, approval isrequired at the original approval level beforeexpenditure is incurred.

Approval is required at theoriginal approval level beforeexpenditure is incurred.

2.2.5 Unbudgeted Capitalexpenditure NOT identifiedin Operational plan - ALL OPERATIONS andDEVELOPMENT PROJECTSIndividual AFE value Note 4 < US$25k (Cumulative

unbudgeted expenditurecapped at US$500kthen revert to next higherlevel)

Mine Exco memberand Financial ManagerOperation

General ManagerInternational Operations

< US$50k (Cumulativeunbudgeted expenditurecapped at US$1mthenrevert to next higherlevel)

General ManagerInternational Operationsand Financial ManagerOperation

Vice President Ghanaand Local Head of Finance

> US$50k (Cumulativeunbudgeted expenditurecapped at US$2mthenrevert to next higherlevel)

Vice President Ghanaand Local Head ofFinance

Opco

US$2 to US$15million Opco GFL Exco

> US$15million GFL Exco GFL Board

Note 3 All capital expenditure amounts include contingencies.

Note 4 The objective of the Authority for Expenditure (AFE) under capital expenditure is to create the facility to incur expenditure. The actualpurchasing of capital spend is governed by section 2.5.

All IT capital expenditure must in all instances be co-approved by local IT OPS Manager and Group CIO or his delegate.

All on-mine exploration must in all instances be co-approved by the EVP Exploration or his delegate.

afe - flow meters

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