Annual Report 2012 - Sentula

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Sentula Mining Limited Integrated Annual Report 2012Governance reports continued34The risk management process is conducted in thecontext of a formalised system to identify and assessthe primary risks to which the Group is exposed.The approach to the management of the riskincorporates the following key steps:• Identify the risks that could have a material impacton the Group’s ability to achieve its strategicobjectives;• Analyse the risks and mitigating controls;• Ensure that the appropriate controls are put inplace to mitigate or reduce the residual risk to anacceptable level;• Monitor the effectiveness and implementedcontrols; and• Regularly report to the Audit and Risk Committeeand Board.Managing risk and risk factorsA summary of the major risks, in no order of priority, to which the Group is exposed and the mitigating strategiesthereto, is presented hereunder:Root cause Impact MitigationFinancialThe Group’s growth andsustainability is dependenton the support of anumber of financialinstitutions.This funding is utilised toinvest in the Group’songoing capital andworking capitalrequirements.Group capital structure andworking capital adequacy isunresponsive to changing marketand operating conditions whichmay result in a breach of thecovenants of the facilities.Should these facilities bewithdrawn or reduced the Group’ssustainability will be severelyimpacted.Occupational health and safety riskMining is a hazardous Failure to maintain high levels ofactivity and the Group safety can result in harm tooperates in a sector that is employees or communities nearsubject to numerous safety the Group’s operations.and health regulations.Failure to meet safety objectivesGiven the large fleets of may breach the Group’s values,plant and equipment impact its reputation and affectbeing operated by the the morale of employees, theGroup, exposure toachievement of productionmining accidents is the targets and the Group’s licencesingle most significant to operate.health risk facingthe Group.Severe safety incidences canresult in the Group’s reputationbeing damaged with adverseconsequences for its stakeholders.The Group’s financial risk is managed in termsof a Financial Risk Management policy whichendeavours to reduce financial risk toacceptable levels and ensure the Group’ssolvency and liquidity.The Group also fosters good relationships witha number of banks and monitors its liquidity andcovenants on an ongoing basis.To ensure that the Group’s working capital isadequate to bridge operational disruption,standby finance facilities have been secured.The Group places a very high priority on safetyand invests considerable resources in maintainingand improving safety standards at its operations.In this context the following initiatives have beenimplemented:• Programmes to comply with ISO 9000, 14000and OSHAS 18000;• Behaviour-based training and rigorousenforcement of standards;• A SHE forum established at senior management(EXCO) level;• Incentives linked to the meeting of objectives;• Monitor conditions from a safety andoperational perspective, with regard to hazardsidentified and solutions implemented;• Risk elimination programmes and the mitigationof assessed risk; and• Engineered solutions (FRCP and AFRS).
Sentula Mining Limited Integrated Annual Report 201235Root cause Impact MitigationWeather impactThe Group’s operationsare conducted in an openenvironment which isexposed to the naturalelements.Credit riskThe Group is exposed tosubstantial credit risk whenrendering services tocounterparties that do nothave the financial strengthof larger companies.Adverse weather conditions suchas excessive rain, heat, fog anddust adversely impact the Group’sability to meet its operational andfinancial targets.The inability of a counterparty tomeet its obligations to the Groupcan have a material severefinancial impact on the Group’sability to meet its financialobjectives.Skills retention and succession planningThe inability to recruit, Failure to retain skilled employeesdevelop and retainor to recruit appropriate new staffappropriate skills remains members may result in increasedan ongoing risk for the costs, interruptions to existingGroup’s operations.operations and lost opportunities.A high employee turnover couldalso result in the loss of criticalskills and ’corporate memory’.Initiatives to limit the impact of adverse weatherconditions include:• the design and maintenance of effectivedrainage and pumping systems on operations;• ensuring that haul roads and relatedinfrastructure are constructed to ensure gooddrainage and durability;• contracted flexibility in operational activities inconjunction with the scheduling of operationalactivities and flexible production targets; and• maintain high service delivery quality.To reduce this risk to an acceptable level, thefollowing initiatives are taken:• ongoing credit assessments of counterparties;• credit enhancements, where available, such aspayment guarantees, credit insurance andsecurity deposits;• contractual terms to enable the Company tolimit its exposure;• diversification of the client base; and• the strengthening of executive levelrelationships.The Group recognises that the mining industry isexperiencing a skills deficit and has implementeda number of strategies to attract, retain anddevelop its best talent.These include:• regularly benchmarked market-relatedremuneration and long-term incentive schemes;• comprehensive and in-house trainingprogrammes, job-based skills training andapprenticeships and learnerships;• growth opportunities and multiskilling foremployees;• succession planning programmes are in placewhich are reviewed bi-annually; and• ongoing market research on availability ofscarce category skills.
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Annual Report 2012 - Sentula

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