Strandline Resources has announced that it has taken another key step towards development of its Coburn mineral sands project in Western Australia by selecting Macmahon Holdings as the preferred contractor to provide mining services for the project. The parties have signed an early contractor involvement agreement (ECI Agreement) for early works associated with contract mining services.
Under the ECI Agreement, the parties will work exclusively over the coming months to further optimise the mining solution and conclude contract documentation. The scope of the mining services contract will include mining of ore at a rate of 23.4 Mt/y, overburden removal, pit backfill and land recontouring, transfer of concentrate from the Wet Concentrator Plant (WCP) to the Mineral Separation Plant (MSP) and general mining-related earthworks.
The contract mining term is expected to cover the first five years of Coburn’s production. Coburn is a world-class long-life mineral sands deposit hosting exceptional zircon and titanium mineral sands products. The mining method is conventional open pit dry mining in free-dig sand with in-pit tailings deposition, progressive backfill and rehabilitation.
“Macmahon’s experience in large bulk materials handling and mining, including dozer push operations, means it is well credentialled to meet Coburn’s mining requirements. Macmahon’s solution provides Strandline with a long-term safe, reliable and highly efficient mining solution for Coburn. The financial terms of the mining contract will utilise an alliancing-style commercial framework based onthe mine plan, methodologies and productivity estimate assumptions contained in the Coburn Definitive Feasibility Study (DFS), released Apr-2019.”
The Coburn DFS shows the project will generate strong financial returns with a pre-tax NPV of A$551 million, an IRR of 32%, Life of Mine EBITDA of A$1.9 billion over the initial 22.5 years (average annual EBITDA of A$86 million) and an attractive revenue-to-operating cost ratio of 2.2, based on TZMI’s commodity price forecast. Strandline Managing Director Luke Graham said the agreement with a highly reputable mining contractor in Macmahon forms a key part of Strandline’sstrategy to prepare for near-term development.
“We are pleased to establish this relationship with Macmahon and look forward to further optimising the mining solutionand contract documentation in readiness for development,” Graham said. “Coburn has a world-scale inventory, it is in a Tier-1 location, we have binding offtake agreements in place with top-shelf customers, reputable contractors on board developing solutions and project funding discussions progressing strongly.”