Centamin has announced that, following an independently managed contractor tender process, the underground operations at its Sukari Gold Mine will transition from contractor-mining to owner-operator mining with immediate effect. This change will deliver significant cost savings and improve operational control and mining flexibility, whilst also enabling the company to upskill the local workforce.
Perenti-owned Barminco is the current underground contractor at the operation. The original contract commenced in 2009 with an initial term of three years and was extended in November 2013 for a three year term. Following an extension to February 2017, Barminco was awarded a five year contract to November 2021 following a competitive tender, plus a five year option.
The decision to move to owner mining, following the expiry of the current five-year contract it says has been based on the following: Reserve growth – the 200% increase in Sukari underground Proven and Probable Reserves, as announced in December 2021, underpins an eight-year underground life of mine, with identified near-term growth targets to extend beyond a ten-year life of mine; Leadership team – the operational leadership at Sukari has been significantly strengthened, with experienced underground expertise and increased investment in the development of the national workforce; Operational benefits – an owner-operator model including risk-based analysis against the submitted contractor-mining tender proposals identified significant operating synergies for the broader Sukari operations; Cost savings – the transition to owner-operator mining is expected to generate long-term cost savings of an average US$19 million per annum from 2023 onwards compared to the 2021 cost base, and; Mine life extension and upside – 90,000 m of underground drilling is budgeted for 2022, including identified near-term growth targets to extend the underground beyond a ten-year life of mine and helping to support the underground expansion study which is due for completion in H2 2022.
A detailed transition plan to owner-operator mining is in place with implementation underway, including utilising a third-party underground mining specialist to assist with workforce training. The company has also executed its contractual right to purchase the current underground mining fleet from the incumbent contractor for a total capital cost of US$10.5 million to be paid this quarter, Q1 2022.
Following the completion of an independent tender process, the company has awarded Geodrill Ltd a five-year contract to provide underground drilling services, including a minimum of 90,000 metres of drilling per annum and introducing reverse circulation (RC) drilling to the underground which is faster and enables larger samples to be taken. The contract is to commence this quarter, Q1 2022.
