Macmahon Holdings’ acquisition of underground contracting business, GBF Group, is already paying off, with GBF receiving a conditional letter of intent from Silver Lake Resources for further work at the Mount Monger gold operations in Kalgoorlie, Western Australia.

GBF has been operating at Mount Monger since 2014 and currently provides mining services to the Daisy Complex, Cock-eyed Bob and Maxwells mines, which form part of this operation, expected to produce 120,000-130,000 oz of gold-equivalent in Silver Lake’s 2020 financial year.

Under the new letter of intent, GBF’s tenure at these sites will be extended for three years from March 1, 2020, and GBF will also develop Silver Lake’s new Santa mine, due to commence next month.

GBF estimates the value of the new work with Silver Lake will add around A$200 million ($134 million) to its order book. The two companies will now negotiate the formal mining services agreement, with finalisation expected in March, Macmahon said.

Macmahon CEO and MD, Michael Finnegan, said: “The new work is an important milestone in our strategy to further expand in the underground market, and demonstrates the value in our GBF acquisition. We are looking forward to working closely with Silver Lake on this project and building on our relationship with this key client.”