This is a well-structured profitability case with a clear cost-focus that requires candidates to identify equipment maintenance and fuel consumption as the primary cost drivers (57% of mining costs combined). The case effectively guides candidates from ruling out revenue opportunities through to a specific operational recommendation, making it medium difficulty by requiring both financial analysis and qualitative decision-making around truck alternatives.
African Gold Mines Co. (AGM) is a junior gold producer with one open pit mine currently in production in Cameroon. The mine was established 10 years ago, and forecasts predict at least another 10 years of consistent gold production. Last year, AGM produced 250k oz of gold from their mine. They have come to us as their profit level has been slowly decreasing over the past five years. They had numerous operational issues with the mining equipment, problems with the workers’ union and issues with community relations notably. They want us to investigate what is the best course of action for their operation to return to their previous level of profitability within 12 to 24 months.
They want us to specifically focus our attention on the mining department of the company.