Business Transformation

By turning the spotlight on enhancing the efficiency of our operations, we are shaping our business for a profitable and sustainable future for the benefit of all our stakeholders – targeting US$100 million cumulative revenue, cost savings and productivity improvements over the next four years, to 2021.


The Group has in recent years faced short and medium-term price pressures, challenging operational conditions and increasing costs related primarily to deeper mining, increased waste and longer haul distances. These factors have placed increasing pressure on margins and cash flow, in particular over the past two years. In response, management embarked on streamlining the business in 2016 with continued cost control focus in early 2017. In February 2017, the Group identified the need for a formal business review process, and with the assistance of external consultants., the roll-out of the Group-wide Business Transformation commenced in the second half of 2017.

A dedicated Business Transformation team, headed by the Chief Business Transformation Officer, and fully supported by the Chairman and Board of Directors, has been tasked to ensure the successful implementation and ongoing sustainability of all revenue, cost reduction and productivity improvement opportunities. These opportunities were primarily generated by the entire workforce through focused idea generation sessions to drive bottom-up innovation and ownership.

Organisational Health

The organisational health of the Group underpins the success and sustainability of the Business Transformation and through an organisational health index (OHI) survey, areas requiring improvement were identified and are being addressed. A follow up OHI survey is scheduled during Q4 2018 to assess the impact on the organisational health of the Group following the implementation of these initiatives. The Business Transformation employee recognition and reward scheme, which will be self-funded through the gains of the Business Transformation, has been developed and implemented to recognise and reward the dedication and performance of the Group’s employees in driving the Business Transformation


Through a vigorous planning phase, more than 200 initiatives were initially identified, targeting cumulative cash cost savings and productivity improvements of approximately US$100 million over the next four years (net of implementation costs and fees). Thereafter, an annual run rate improvement of approximately US$30 million has been targeted from 2022 onwards compared to the 2017 cost base.

The implementation phase of the Business Transformation commenced in the fourth quarter of 2017 and has continued its momentum in 2018. Initiatives which will contribute US$47.0 million to the cumulative US$100.0 million target have been implemented as at July 2018. Of these implemented initiatives, US$4.7 million relates to once-off savings and the balance of US$42.3 million relates to cumulative recurring annualised benefits over the 4-year period. US$10.0 million of the implemented initiatives have been cash flowed as at July 2018

The table below references the target of US$100.0 million (as reported in the 2017 Annual Report) together with the status of implementation of the primary contributing initiatives (as reported in the 2018 Half Year Report). Of the US$47.0 million implemented as at July 2018, US$39.4 million has primarily resulted from the successful implementation of initiatives in the mining and processing workstreams and the balance of US$7.6 million has resulted from improved working capital management, reduction of corporate overheads and the sale of non-core assets.

DELIVERING US$100 million
(up to 2021)

DELIVERING US$30 million
(annually 2022 onwards)

Initiative & Target Activity & Target Objective Impact Status


US$42.0 million

Drill, load and haul activities:


Reduce mining costs through:

  • improving efficiencies and rates; and reviewing tenure of mining contractor;
  • optimising support equipment requirements and associated cost;
  • improving haul roads to optimise truck speeds;
  • increasing truck capacity by 7% by installing greedy boards; and
  • improving drill rates by 30% by modernising the drilling fleet with a cost-efficient autonomous system.

Reduce waste unit costs

Cash (B/S)

Reduce ore unit costs

Cost reduction (I/S)

Implemented1 US$15.6 million
A reduction in mining rates implemented in H1 2018 primarily based on the optimisation of the mining fleet and support equipment, increased truck capacity through installing greedy boards and improving haul road conditions.

Work in progress2
Further rate reductions targeted through continuous maintenance of haul roads, improving truck speeds, optimising shift changes and drill rates.

Targeting further benefit through improved diesel consumption initiatives.

Pit design:


Opportunities to steepen current slope angles are being studied with the benefit of reducing waste tonnes over the LoM.

Reduce waste tonnes

Cash (B/S)

Work in progress2
Slope design and blasting trials to ensure reliable berm retention are underway with initial positive results. The implementation of this initiative will follow the geotechnical, blasting and safety sign-offs which are currently expected in Q4 2018.

Blasting practices:


Changing blasting patterns and practices, accessories and explosive mix, leading to a reduction in blasting consumables by up to 30%.

Reduce direct cash costs

Cost reduction (I/S)

Implemented1 US$4.1 million
Reduced the number of primers used per blast hole in both ore and waste by 1 unit.

Secured early settlement discounts with explosive suppliers.

Work in progress2
Additional blasting initiatives being tested to further reduce explosive consumables and accessories.


US$34.0 million

Plant uptime:


46 initiatives identified to improve plant uptime through:

  • improved maintenance scheduling (planned and unplanned);
  • improving ore feed management;
  • improving stability of power supply; and
  • reducing operational delays.

Increase ore tonnes treated

Net revenue increase (I/S)

Implemented1 US$0.5 million
Once-off implementation of a scrubber bypass which mitigated the loss of tonnes due to the planned Plant 2 extended shutdown in H1 2018 to replace the scrubber.

Work in progress2
The plant uptime initiatives are being implemented at different stages during the 4-year period, and the benefits are expected to ramp up from 2019.

Additional throughput:



Deploy an XRT machine to re-treat tailings.

Increase carats recovered

Net revenue increase (I/S)

Implemented1 US$18.3 million
Additional carats recovered to 30 June 2018 from the re-treating of tailings by the new XRT sorting machine.

Review and renegotiate the Alluvial Ventures contract for the operation of the third plant at Letšeng.

Reduce direct cash costs

Cost reduction (I/S)

The Alluvial Ventures contract has been renegotiated to realign the profit margin share and to extend the tenure to mid-2020.

Plant consumables:


Efficient usage and reduce consumption of plant consumables.

Reduce direct cash costs

Cost reduction (I/S)

Implemented1 US$0.8 million
Improved flocculent and coagulant combination product introduced.

Work in progress2
Further initiatives to optimise the usage of plant consumables are being implemented, such as improved stock controls and the installation of a new flocculent recovery unit in Plant 1.

Working capital and overheads:

US$4.0 million

Working capital:


Improve working capital management with specific focus on redundant and slow-moving plant inventory at Letšeng.

The working capital initiative is a once-off benefit which is expected to deliver over a 12-18 month period.

Reduce working capital (once off benefit)

Cash (B/S)

Implemented1 US$0.6 million
Draw down of slow moving stock and the rebasing of economic order quantities has been implemented.

Work in progress2
Redundant stock and scrap metal has been identified for sale.



Reducing support service costs at Letšeng through contract reviews and focused contract management.

Implementing stricter spend control procedures on administrative and support costs at Letšeng

Reducing the Letšeng corporate office footprint and other office costs

Reduce direct cash costs

Cost reduction (I/S)

Implemented1 US$3.1 million
The catering and housekeeping contract was reviewed and renegotiated.

Entered into new IT network provider contracts offering improved technological services and rates.

The Letšeng corporate office footprint has been reduced through the sub-leasing of excess office space.

Work in progress2
Additional initiatives to reduce overheads at Letšeng, including further energy saving opportunities and insurance reviews, have been identified and are in the process of being implemented.

Corporate activities:

US$20.0 million

Non-core assets:


Selling non-core mining fleet and redundant stock at Ghaghoo.

Reduce direct cash costs

Cost reduction (I/S)

Once-off cash benefit

Cash (B/S)

Implemented1 US$2.1 million
Assets associated with Ghaghoo i.e. the aircraft servicing the mine, certain non-core mining fleet and inventory have been sold.

Reduce or eliminate the ongoing care and maintenance costs at Ghaghoo.

Reduce direct cash costs

Cost reduction (I/S)

Work in progress2
The initiative to reduce or eliminate the care and maintenance costs of Ghaghoo mine continues.

Selling other non-core assets across the Group.

Once-off cash benefit

Cash (B/S)

Work in progress2
Additional non-core assets across the Group have been identified for sale.

Corporate costs


Implementation of stricter spend control procedures on admin and support costs and focusing on fit-for-purpose operations.

Downsizing office footprint in the United Kingdom, South Africa and Botswana.

Reduce direct cash costs

Cost reduction (I/S)

Implemented1 US$1.9 million
Office footprints in the United Kingdom and Botswana reduced.

Strict spend control through one centralized cost approval office implemented.

Focused control of travel expenditure and associated costs.

Reduced Annual Report publishing and printing costs.

Reduced professional fees.

Work in progress2
Reduction of membership association fees, reduced office footprint in South Africa and numerous other initiatives are being implemented to further reduce Corporate costs.

1. “Implemented” – means that all key activities to realise the value of an initiative have been completed and no further action is required for the benefit to begin to accrue and be realised.
2. “Work in progress” – means an initiative has been planned and a business case has been approved for implementation. Associated implementation costs may have been incurred.