ISIMILO’S NEW BUSINESS MODEL CATERS TO JUNIORS’ FINANCIAL NEEDS

With its first project underway and a secure pipeline of additional work moving forward, the company is guaranteed a successful future.

Isimilo DBO was established in September 2017 by MD Mark Berger, a metallurgist by profession who has been working in the mining sector in Africa for the past 30 years.

This article first appeared in Mining Review Africa Issue 6 2018

And it is on the back of this extensive experience and long-lasting relationships Berger has established over his career in the sector that he felt he could contribute to improving project delivery for smaller scale mining companies.

A vision comes to light

A friendly meeting in August 2017 with Turkish national Vuslat Bayoglu, chairman of investment company Menar Holdings, brought a vision to light to establish a company that could undertake all process work for Menar’s 50% owned South African coal company Canyon Coal in a financially transparent manner which would give the company peace of mind that it was paying for the best service possible at a cost competitive rate.

And so Isimilo DBO was born – to undertake design, build and operate (BDO) process plant work for Canyon Coal primarily but also for the junior and mid-tier market in the coal, gold, base metals, and mineral sands sectors in South Africa initially and the entire African continent thereafter. Canyon Coal is a 49% shareholder in Isimilo DBO which also boasts a 51% BEE shareholding.

“It is unheard of for a new start-up company to begin its journey with a guaranteed project pipeline, while also having the flexibility to explore additional opportunities to generate our own income outside of Canyon. This is positioned us to achieve success,” says Berger.

An alternative implementation approach designed to get projects quickly off the ground

Isimilo’s business model is built on the premise and understanding that junior and small-scale miners need to move their projects up the value curve quickly, with minimal capital outlay.

“The majority of large-scale EPCM companies are burdened by heavy overhead costs and this poses the biggest challenge for juniors who need a partner who understands their needs,” Berger explains, “and Isimilo DBO is the answer to this.”

With just a small owners team (which Berger is in the process of establishing), Isimilo DBO will partner with industry specialists in their respective fields to put together tailor-made solutions for clients – with the understanding that the information is preliminary and based on data that is available.

“By working with partners on specific project elements for a specific duration on a project as and when required we can offer clients the ideal solution for minimal cost because we do not carry corporate overhead costs.

"In combination with a ‘hand-picked’ network of competent expert partners, thorough procurement processes and modular pre-engineered solutions we believe we have a unique offering that juniors will find financially attractive. And with the ability to leverage off of Menar’s substantial balance sheet, we are ourselves financially stable and positioned to take on project work.”

So confident is Berger in the Isimilo DBO business model that he promises clients who opt to work with him, as opposed to a traditional project management EPCM approach, an average of between 15% and 20% saving to get their projects off the ground.

Canyon Coal project pipeline

Isimilo DBO is well underway with the construction of its first process plant for Canyon Coal’s new Khanye colliery in Bronkhorstspruit. Berger confirms that the company was able to deliver the project for 30% less capital expenditure than a competing bid on the project.

The contract for Khanye includes the design, build and operation of a 400 tph coal washing plant that is on track to be commissioned in October this year.

Beyond Khanye, there are an additional five projects in the Canyon Coal pipeline – a 800 tph coal washing plant for the Palmietkuilen colliery project, a 300 tph coal washing plant for the Ukufisa colliery project, a 1 000 tph coal washing plant for the Springfield colliery project, a 600 tph coal washing plant for the De Wittekrans colliery project and a 400 tph coal washing plant for the Witfontein colliery project.

All these projects are located within a few hundred kilometres of Johannesburg and are all scheduled to come on stream between now and the end of 2020.

“Canyon Coal is implementing a massive growth strategy at present, and is looking is increase its ROM production from 4 Mtpa to 10 Mpta by 2019 – which equates to about 6 Mtpa of coal in the next three three years,” Berger reveals.

Canyon Coal currently operates four mines which feed two wash plants in eMalahleni and Delmas.

Khanye colliery is however not the only project Isimilo DBO is currently working on – it is also underway with a phase 1 upgrade of Menar’s Zululand anthracite mine situated to the east of Vryheid.

Beyond Canyon Coal

Isimilo already has ‘irons in the fire’ with regards to new project work outside of Canyon Coal. This includes a South Africa-based copper sulphate project - which will entail renovating an existing plant and operating it thereafter.

The company has also tendered on two chrome projects in South Africa – a small operation in Kroondal and the implementation and operation of a major chrome tailings project with new plant incorporating new pyro-metallurgical technology.

“While the focus for Isimilo is definitely going to look for work across the African continent – my priority for now is building a track record in South Africa which will showcase our skills and process plant delivery capabilities.

"My aspiration is to see Isimilo as the first point of contract for new process projects in the short run and from there to emerge as a niche partner to selected clients in the minerals industry in the long run,” Berger concludes.

 

Menar Holding