Artemis Gold Inc says it has made an award for the engineering, procurement, construction and commissioning (EPC) scope of works for the processing plant and associated infrastructure at its Blackwater project in British Columbia, Canada, to Sedgman Canada Limited, a CIMIC Group company.
The award amount of approximately C$312 million ($243 million) is consistent with the prescribed budget for the process plant and selected infrastructure scope of works in the 2021 feasibility study.
Sedgman Canada Limited is a wholly owned subsidiary company of Sedgman Pty Limited, a CIMIC Group company. CIMIC Group (ASX:CIM) is an engineering-led construction, mining, services and public private partnerships leader working across the lifecycle of assets, infrastructure and resources projects.
The EPC contract is expected to be executed by June 30, 2022, with the contract supported by performance security including bank letters of credit, which will underwrite the financial performance and obligations of the contractor under the contract.
While the parties finalise the definitive EPC contract, in order to maintain the project schedule, an interim services agreement has been agreed which could cover procurement and pricing of long lead equipment and optimisation through refined scope changes, among other aspects.
The project schedule supporting the award to Sedgman includes the following assumptions:
- Construction mobilisation and major works preparations commence in Fall 2022 with process plant bulk earthworks scheduled to be completed prior to the start of major works;
- Commissioning activities of the process facility to commence in Q1 (March quarter) 2024; and
- First gold pour expected in the first half of 2024.
The final EPC contract terms will provide for potential cost adjustments of certain components of construction representing approximately less than 15% of the total contract amount, including the potential for cost adjustments from further quantity definition, Artemis said. Standard adjustments, including currency exchange rates for certain equipment purchases also apply, and further optimisation of the processing plant with final engineering will occur.
Artemis is also considering awarding additional construction packages under an EPC agreement type structure to further enhance the risk management of the total capital expenditure for Blackwater, it said.
When combined with the EPC for the Power Transmission Line announced on August 18, 2021, the percentage of the estimated total capital expenditure for Blackwater under EPC is on track to target circa-60% of the initial Stage 1 development capital of C$645 million in a lump sum EPC type arrangement by the September quarter of 2022.
Stage 1 development should lead to the building of a 6-9 Mt/y operation (6 Mt/y in years 1-4 and 9 Mt/y in year 5) able to produce around 312,000 oz/y of gold.
Steven Dean, Chairman and CEO, said: “The award of the EPC job for the process plant at Blackwater is another significant milestone for Artemis, reflecting a competitive process involving multiple bidders. We are very pleased to be working with a world-class engineering firm in Sedgman. In partnership, we will work to finalise the design and engineering of the Blackwater project in advance of a start of major development activities. Blackwater remains on track for a start of major construction activities following receipt of Mines Act and other permits in Fall 2022 with a first gold pour in H1 2024.”