Red 5 Ltd has awarded the King of the Hills (KOTH) mining services contract to Macmahon Contractors Pty Ltd, a subsidiary of civil and mining contractor Macmahon Holdings.

The contract award follows the completion of a thorough competitive tender process in late 2020 for the open-pit and underground mine contracts and encompasses the combined mining operations at KOTH, in Western Australia, Red 5 said.

Red 5 signed a Letter of Intent with Macmahon for the mining contract in March and, following the finalisation of contract terms, has now formally awarded the contract. The contractual terms are in line with the mining unit costs outlined in the KOTH Final Feasibility Study (FFS).

This study outlined a 16-year life of mine plan from open-pit and underground mining, whereby the company would produce 176,000 oz/y of gold over the first six years, with an initial five years of underground mining. First gold is scheduled in the June quarter of 2022.

The mining services contract is for an initial five-year period, with industry-standard incentives and penalties for mining contractor performance.

Red 5 Managing Director, Mark Williams, said the formal award of the contract to Macmahon is a significant milestone for the project.

“We’re pleased to have finalised agreed contract terms with Macmahon and formally appointed them as our open-pit and underground mining contractor,” he said. “Macmahon is one of the strongest mining contractors in the market, and we are looking forward to partnering with them to deliver Australia’s next significant new gold mine.

“Importantly, the contract terms are in line with the mining unit costs outlined in the KOTH FFS. Operational efficiencies and cost benefits have been realised in having both mining operations managed by a single contractor.

“Given the current tightness in the labour market in Western Australia’s mining sector, we believe Macmahon is well placed to secure the skilled resources required to operate the underground and open pit mines at KOTH.”