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The Archer Mining and Equipment Costing and Cash Flow System

What Will the Cash Flows be on my Equipment?

Are you involved in budgeting, setting up future cash flows, or working out the viability of a business that uses plant and mobile equipment?  Then you know how complicated it can get, and how difficult to quantify.

The Archer Mining Equipment Costing and Cash Flow Forecast System ("EquipBudget" for short) may be your solution.  The system starts with a list of your equipment.  Each machine will have a maintenance and repair cycle designed by the manufacturer, possibly modified in the light of experience.  This will specify when each part of the machine must be replaced, and the costs of replacement: For example, a Cat 992 front-end loader needs its engine replaced every 15,000 hours at a present-day cost of R770,000.  We also specify fuel consumption, Oils, and Lubrication Life Cycle Costs per 1000 hours.

For a given operation, we set up the running hours expected of each piece of equipment per month based on the production plans.  This is linked to the costs specified above to give a consolidated cash flow over time.

Now the capital cost, replacement costs, and rates of interest and depreciation can be brought into play.  Finally, the series of cash flows is consolidated and can be graphed.

EquipBudget will allow you to do "what if" scenarios with different combinations of equipment, different rates or production, interest rates, and financing options.  It has been invaluable in proving the viability of several mining operations, and is now being made available for licensing by Archer Mining.

The program compliments the EquipCost system mentioned here. EquipCost records historical data and is a useful check on the input to EquipBudget, which looks at future cash flows.  Need More Details?  Please e-mail us about EquipBudget, or call Rick at 011 802-2685.

For the entrepreneur planning a new project, the Accountant and the Chief Financial Officer, the program can be an invaluable tool for "What-If" and sensitivity analysis.

The software has a sufficient track record of proven results for it now to be run for other companies by Software Africa in consultation with Archer Mining.

Features

  • Life Cycle Costs (LCC) are split into major categories such as Repairs and Maintenance, Tyres and tracks, Ground Engaging Tools, Oils and Lubes, and Filters per 1000 hour block.
  • Fuel consumption per hour for the equipment.
  • Hourly depreciation for the equipment.
  • The equipment book value, residual value percentage and remaining Service Meter Reading hours.
  • The replacement values of the equipment are adjusted for inflation using a percentage increase based on the year when the equipment will be replaced.
  • The production rate and quantity per activity
  • The team composition (type and number of equipment) per activity
  • The starting service meter reading (SMR) hours for each equipment item
  • The opening book value of the assets
  • Fuel price and rebate if applicable
  • Hire rates for equipment hired from external contractors.
  • Monthly capital and interest payments for all the equipment including light vehicles.
  • Final cash flow, based on input from all the above.

Contact Us Now!

Send Rick an e-mail for information about the EquipBudget model

  • Please include your company details (physical and postal address, telephone, fax and e-mail, and contact person's name),
  • and tell us a bit about your company and what you do.

We or Archer Equipment will contact you to arrange a demonstration.


Detailed Information Required for Equipment Costing and Cash Flows

This is the base information to be supplied to calculate the equipment costs and cash flows for a project using the model:

To calculate the Equipment Costs:

  • Breakdown of activities to be costed (e.g. mining operations)

  • Bill of quantities per activity per period (monthly, yearly etc.)

  • Resources to be used per activity (type and number)

  • Production rate per activity per period

  • Hours to be used for support equipment (all equipment not part of resources in the activities above) per period

  • Complete equipment list with the following information for each equipment item:

o        Equipment make and model

o        Equipment number

o        Equipment serial number (not essential)

o        Starting Service Meter Reading (SMR) hours to be used for the costing

o        Book value to be used for the costing

o        Replacement age

o        Residual value or percentage of starting book value to be used for residual value, when replacement takes place

  • For each equipment type:

    • Replacement cost
    • Replacement age
    • Life Cycle Costs (LCC) in 1000 hr blocks for repairs and maintenance, tyres & tracks, oils & lubes and filters. If this is not available:
      • Per component / item to be replaced
        • Name or description
        • Part number (not essential)
        • Quantity
        • Unit price - new or for service exchange or both
        • First change hours
        • Change out interval hours
        • Stop hours - if applicable
      • For service kits / filters per service interval
        • Same info as above for filters / service kits
      • For oils and lubes
        • Same info as above
      • For tyres / tracks
        • Cost per tyre / track
        • Quantity
        • Replacement interval
    • Average fuel consumption per hour (litre / hour) - only required if customer pays for fuel
    • SMR hours available per period. This can be in the form of days available, availability and utilisation of availability to calculate the hours; or only hours given without the underlying calculations.
  • Fuel cost per litre and rebate makeup received from SARS, if any - only required if customer pays for fuel

To compile the Cash Flows:

  • Rates as per contracts per activity per period (this can be rand per ton and rand per hour rated) and should include any fixed amounts received per period - this is used to calculate turnover

  • Ground engaging tools (GET) cost per ton (assuming a mining contract)

  • Lease and rental costs of equipment per period

  • Hire rates per equipment item or type for any hired equipment

  • Cost of any other equipment not included in the equipment costing calculations above

  • Repayment of outstanding debt per period split into capital repayment and interest

  • Cost of supervision and labour. This can be a lump sum per period, but should preferably be the payroll with the following information:

o        Hourly paid employees:

§         Employee number

§         Employee name

§         Occupation

§         Site

§         Hourly rate

§         Basic hours worked per month

§         If a thirteenth cheque is paid

§         All allowances received e.g. travel, shift, living out, housing etc.

§         Other contributions paid e.g. provident, medical, funeral etc. (only the company's contribution)

§         Bonus amount or percentage of basic to be allowed for bonus

§         Sunday overtime hours per month to be allowed for

§         Weekday overtime hours per month to be allowed for

§         Public holiday hours per month to be allowed for

o        Monthly paid employees

§         Employee number

§         Employee name

§         Occupation

§         Site

§         Basic salary per month

§         If a thirteenth cheque is paid

§         All allowances received e.g. travel, shift, living out, housing etc.

§         Other contributions paid e.g. provident, medical, funeral etc. (only the company's contribution)

§         Bonus amount or percentage of basic to be allowed for bonus

§         Sunday overtime hours per month to be allowed for

§         Weekday overtime hours per month to be allowed for

§         Public holiday hours per month to be allowed for

o        Skills levy percentage

o        UIF percentage

o        WCA levy percentage

  • Preliminary and General (P&G) costs per period

  • Establishment planned with amounts and period when it will take place

The above should be adequate to allow you to prepare a cash flow.

Related Links:

Continuous Improvement of Equipment Maintenance Operations
Continuously Reduce the Cost of Mining in Real Terms


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