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An Analysis of the Structure and Culture of Strategic Mining Solutions in the Context of the External Environment with Respect to Future Challenges and Recommended Changes

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EXECUTIVE SUMMARY

Strategic Mining (SM) is capable of converting challenges into opportunities, as evaluated in the context of the company expanding its operations into Africa. The company promotes a participative management style which greatly benefits communication at all levels. The Directors of SMÐŽ¦s Board are technically and managerially highly skilled and are therefore in a position to manage company resources efficiently and unambiguously.

A co ÐŽV operative culture exists in the company. This feature is developed from the companyÐŽ¦s core value principle of integrity. This ideal has been the passport to SMÐŽ¦s current successes and which will remain the yardstick by which staff measure themselves in a competitive environment. A cultural meltdown is not expected now or in the foreseeable future.

Key challenges that the company will face are:

„« Competitors. An increased competitor base due to the booming resources sector.

„« Clients / Broker. Corruption, nepotism among African resource brokering agents.

„« Economic down ÐŽV swing. Sudden collapse / market adjustment to certain metals markets.

„« Political uncertainty. Local and African leadership under the spotlight. Will the mining protocol continue to unravel itself and will this incomplete model be co ÐŽV opted by our African partners.

In its current form, SM has a flat structure which is Service orientated. This structure is in a state of evolution and is now adapting the style of a Matrix ÐŽV type structure. This structure will need to be revamped in order to meet the challenges of tomorrow. Personal agendas and power ÐŽV mongering might see the polarization of subsidiary companies. To this end, a Hedral model of company structure has been postulated that, hopefully, will render subsidiary companies closely intertwined with SM, at least at the technical level. The corporate ethos of the Group of Companies will still remain that of integrity.

Changes in the external environment are inevitable, it is a dynamic and on going process, and the structure of SM will accordingly realign itself to benefit from those changes. The internal environment is robust and adaptable, thanks to a strong management team that encourages staff involvement in growing the business.

TABLE OF CONTENTS

EXECUTIVE SUMMARY 2

1 INTRODUCTION 4

2 THE STRUCTURE & CULTURE OF STRATEGIC MINING 5

2.1 Analysis of Structure and the External Environment 5

2.1.1 New competitors 5

2.1.2 The client as a broker 5

2.1.3 Economic down-swing 9

2.1.4 Political instability 9

2.2 Analysis of the Internal Environment with Culture as a Focus 9

3 AN EVALUATON OF THE STRUCTURE & CULTURE OF STRATEGIC MINING 10

3.1 Generalized Organizational Responses to Change 11

3.1.1 Top Management: 11

3.1.2 Middle Management: 11

3.1.3 Employees/Workers/Associates: 12

4 RECOMMENDATIONS 12

5 CONCLUDING REMARKS 13

6 ACKNOWLEDGEMENTS 13

7 REFERENCES 14

TABLE OF FIGURES

Figure 1 - Service Structure of Strategic Mining 6

Figure 2 - Matrix Structure of Strategic Mining (Evolving) 7

Figure 3 - Strategic Mining Organogram 8

Figure 4 - Generalised Organizational Responses to Change 11

Figure 5 - The Hedral Model 13

1. INTRODUCTION

A mineral resource should not lie dormant in the ground; instead it should be extracted and beneficiated and the resultant commodity sold to create wealth. This sequence of events - what we mining people refer to as the ÐŽ§mining value chainЎЁ ÐŽV is a complex fabric of interlocking disciplines that eventually culminates in the winning of the mineral resource. In instances, the mining value chain is compromised, not only from geological uncertainty and mining difficulty, but from social, environmental and political factors. This situation greatly increases the risk portfolio of exploration companies and as a result the ability of management to raise adequate funding is practically nil. The situation is equally bleak for established mining companies where shareholder value cannot be sustained or grown.

The current global resources industry is growing exponentially, this on the back of renewed investor confidence and, more importantly, the insatiable appetite of China and India. In order to satisfy this hunger, international mining companies, giants and juniors alike, are re-looking Africa with a ÐŽ§twinkle and dollar in each eye. Africa has a remarkable diversity of mineral wealth, ranging from oil and gas, base metals, precious metals and gemstones, etc. However, in many African countries these resources lie dormant in the earth, destined seemingly never to be mined due to the selfish nature of political leaders and the associated draconian laws that accompany that unique mindset.

I believe that if ever an opinion had to be expressed it should be ÐŽ§the solution to AfricaÐŽ¦s poverty lies in the groundЎЁ. The extraction of that solution is the means to unshackling the continent. Mining consultants are expected to provide ÐŽ§top drawerЎЁ solutions as well as delivering into and managing the expectations of investors. This is not a simple task, especially on a continent that has a legacy of political, ethnic and socio ÐŽV economic problems and which has a tendency for short term economic gain. Therefore, it is extremely important for companies like SM to be synchronized with the mining pulse of Africa in order to honour its commitment to integrity and service excellence. A dynamic mining industry requires that

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