Member Info for PM01

A good read and I agree that some of these risks could have been foreseen. A Risk Review for Business and EPC would have identified the risks, consequences and mitigations.

Aker, I'm sure Canmax have also taken legal advice. The big question is which lawyer is correct? In many instances its rarely black and white and courts will determine the level of grey.

While both sides behave has gentlemen the Contract remains in the draw, but we now have both sides who have spit their dummies out, both of which will have consulted their lawyers and believe they have the upper hand.

In this case relationship recovery is almost impossible. I've only seen it happen once. George was probably aware for some time hence his actions and hopefully with this awareness he's been engaging with other companies for a while. We complain about communication but how do you put that into an RNS? A Poker game is underway.

Gazza, changing motors can happen easily but depends upon the design strategy. You can change the motor without impacting the cables and MCC if foresight capital is included in the project strategy.

My thoughts on my post from Sunday (copied below). Those that do lunch did not offer their thoughts!

The win-win scenario was not reached and now we have battle between the two parties. The interesting aspect is who holds the best cards and/or who is most desperate? We have listened to George and was that more for Canmax or investors? Time will tell.

From a technical aspect I'm a little uneasy at the messages over the last number of weeks. Quote from todays RNS 'Shareholders should note that there can be no assurance or guarantee that Stark's projections will be achieved and that there will not be further delays to Stark's completion of plant modification and final commissioning.' George previously said Commissioning was complete but he now says it's ongoing. In my experience Commissioning continues until Ben Op and handover is completed. He also says no assurance plans will be achieved. This is a different take from his previous messages. Is he not so confident now?

My thoughts. Much time and effort has been expended by all parties on this project and I'm 'reasonably' confident the technical issues will be resolved. The big question is when, by who and under what funding.

As the song goes 'No one knows what goes on behind closed doors'. Although bump in the road, hopefully.....

Original post.

Another week on the PREM Journey is approaching. Is this the big week or just another milestone in the life of Prem?

Many opinions are being thrown about on here and thats what they are, opinions, wishes, doubts etc.

What we have is a plant built to produce saleable material and an arrangement between two parties. We currently have two challenges.

Commercial and Technical

1. Commercial

I was always taught that in negotiation to aim for a win-win outcome for many reasons, although I have known some go for a win-lose scenario with disastrous consequences. Latest info (RNS) suggested both parties are looking for the win-win by working together although the length of time its taking, may suggest they are having difficulty in achieving this outcome and they are at an impasse for reasons currently unknown.

2. Technical

We know the plant does not produce material at the correct spec and we have been told there are plans that will deliver improvements to mitigate this issues. How confident are the two parties of resolving this technical issue and how long will they remain 'friends' across the negotiating table?

Is the resolution of the technical issue affecting the commercial discussions or is is one side after a win-lose scenario?

We will find out shortly, unless of course there is another delay! and that may increase tensions between the two parties unless they remain confident of success.

Those that do lunch maybe able to shed some light.

Yes there is

DP I've read the communications. This states '...Expected production....'

Another week on the PREM Journey is approaching. Is this the big week or just another milestone in the life of Prem?

Many opinions are being thrown about on here and thats what they are, opinions, wishes, doubts etc.

What we have is a plant built to produce saleable material and an arrangement between two parties. We currently have two challenges.

Commercial and Technical

1. Commercial

I was always taught that in negotiation to aim for a win-win outcome for many reasons, although I have known some go for a win-lose scenario with disastrous consequences. Latest info (RNS) suggested both parties are looking for the win-win by working together although the length of time its taking, may suggest they are having difficulty in achieving this outcome and they are at an impasse for reasons currently unknown.

2. Technical

We know the plant does not produce material at the correct spec and we have been told there are plans that will deliver improvements to mitigate this issues. How confident are the two parties of resolving this technical issue and how long will they remain 'friends' across the negotiating table?

Is the resolution of the technical issue affecting the commercial discussions or is is one side after a win-lose scenario?

We will find out shortly, unless of course there is another delay! and that may increase tensions between the two parties unless they remain confident of success.

Those that do lunch maybe able to shed some light.

SK, The pant will have had a design basis and if that identified 6% off the first pass then its not unreasonable to expect that to be achieved. George presumably specified his requirements and Stark designed and built against those requirements. This may have been designed to have a recycle route to recover additional % but without seeing the design data it's impossible to know. There are occasions on projects where the intent has not been met and the supplier (subject to contracts) would be obliged to rectify. This appears to be the case in this instance. I personally believe the RNS was late considering they would have known about the issues earlier.

In terms of superbly built, that depends upon your perspective. Relative to a top tier COMAH site design I would suggest is not superbly built looking at the previous photos although 'in the bush' they've achieved a reasonable outcome with lower standards etc. As the saying goes believe nothing you hear and only half of what you see.

J - Agree

Jenkoo I cannot imagine there was not a Bonus Malus clause or something similar which would provide a basis for the result of this delay. If not then the key question is who has the upper hand in the negotiations or are both sides willing to accept a win win situation where both sides contribute.

Changing direction now causes heartache and costs for both sides therefore working together to achieve the win win is desirable but what % does win win equate to. Future RNS's will be interesting.

J - I agree with your comments in principle although I've known and been involved in projects where no matter what reviews etc have been held there is sometimes a glitch. One example was the team at the very first formal review said chemical x would not reach the scrubber based on extensive operational experience. Oops within 2 months the scrubber had a hole and chemical x was present. A replacement in SS was achieved in 8 weeks. Another project was canned when the new technology failed to work.

In terms of optimisation I agree with your comments although my view is PREM were still in the commissioning stage rather than optimisation, but terminology varies.

Hopefully the issues have been fully identified and solution defined and planned. Time will tell and as Acker says Q3/4 is the time.

Snowking - Hindsight is wonderful. The commissioning process is about proving the design and equipment work. Even with FAT, SAT, performance tests etc etc there is always the possibility of something cropping up. A prudent person would allow a reasonable time to commission and prove depending upon the risks. Assuming of course a risk review was held. Risk reviews can focus on technical, business, people issues etc. If the work behind the RNS is adequate the issue will be sorted on time. If not credibility will be lost.

Many large companies have these issues with their projects and share prices rarely impacted significantly. Unlike small companies like PREM where it's their only project the impact is seen a greater risk (probably is depending on cash flow etc etc) but if its a worthwhile project the companies will work out a resolution to mutual satisfaction.

Acker Agree. The commissioning process is there to prove the design and installation works to the initial remit. Sometimes it goes smoothly, others times it needs tweaks. They have identified the issue and the solution. Although not the boom RNS wanted by everyone its positive assuming they gave completed the review sensibly and deliver against it.

That is the question? If you believe in the project and its outcome, stay. If not leave. Sometimes it takes time to deliver although I have been in projects which have turned out to be lemons. Only those with ‘inside’ knowledge have a better gut feel. Your choice guys and gals.

In a nutshell. managing expectations.

We are still in the above period and in my experience of working with Commissioning teams as Project Manager needing to communicate with the Client/Business there is a balance of data and if told them everything they would be overwhelmed with information and may be interpreted good or bad. During this period there maybe many reasons for hiccups, eg raw material spec not as expected, Instrumentation not working as expected, machinery becoming blocked, control systems needing to be tweaked, or design mess ups etc etc. (I've designed a few chocolate fireguards in my younger days!!). Some will be able to be solved in house, others needing Manufactures or other Specialist involvement. In my experience a period of time from introduction of Process Chemicals to achieving Ben Op would be identified on the programme. This duration would be determined on the number of process steps, complexity etc etc. What we don't have is this detail, and is this material information? maybe or maybe not depending upon your interpretation.

We are in the dark until an RNS is published with exact status but I would not expect a running commentary through RNS at this time. The period we are in does not 'feel wrong' but time will tell.

Aker I agree with your comment on RNS and commissioning. I think with many RNS it's the terminology thats used. Everyone has a different vie. Project Procedures suggest the stages and whats involved in each are defined to avoid ambiguity. I like to think of commissioning as the children have their new toy built and its time to play with it and make it work, or break it! In my early days of project management I used 'to panic' about things not working first time but as Jaguar mentioned it takes time to get it right and achieve Ben Op thats why I'm reasonably relaxed from a technical perspective. Finances are a different subject.

Depends on the definition. My background is the chemical industry. Key stages
Mech completion - this includes Elec/Inst/Control and civil/sructural. Will include hydro tests, loop checks etc
Formal Handover from Const to Comms teams, could be done in phases depending on project size
Commissioning - instrument tuning pump rotation checks, leak checks and introduction of process chemicals
Acceptance trial to agreed parameters and duration
Beneficial Operation when agreed criteria met.
Handover to Ops team

Prem may have different terminology but the stages to go through are generally the same.