Mastermyne Group says it has been awarded the Mining Services Contract to operate the Gregory Crinum underground mine in Queensland, Australia, owned by Sojitz Blue Pty Ltd.

The contract term is seven years, including re-establishment, with the value coming in at A$600-660 million ($464-510 million), the company reported.

During 2020, Sojitz appointed Mastermyne to undertake a feasibility study focusing on the development of a high productivity bord and pillar mining operation. In parallel, Mastermyne was also engaged as the Mine Operator to undertake the re-entry process. The underground mining area was successfully re-entered in late October 2020, with no issues encountered, according to the contractor. Mastermyne continued as the Mine Operator while Sojitz finalised internal approvals.

The re-establishment project scope includes the re-establishment of the underground infrastructure including conveyor systems, ventilation, associated mine services, remediation works and surface infrastructure, all of which is expected to take around six months. Following these works, the mine will immediately transition into production with a staged ramp up to three bord and pillar mining units.

The underground mine is expected to produce around 11 Mt run of mine over the life of the project, with mining production planned to commence later this year.

At full production, the underground mine is expected to employ 180 full-time personnel. Mastermyne will provide underground mining equipment from its current fleet, including three bord & pillar miners, multi bolters and shuttle cars along with a range of ancillary production equipment to support the operation. The contract is expected to deliver on average A$80-100 million of revenue per year once in full production, Mastermyne says.

“Initial funding for the project establishment will be a combination of Sojitz capital and Mastermyne capital with the company drawing on its strong cash position and available funding lines to finance the project,” Mastermyne said. “The company’s capital contribution will primarily fund the overhaul of the mining fleet and ancillary mining equipment, which will be recovered over the term of the contract.”

Mastermyne intends to retain ownership of its mining equipment throughout the project.

Mastermyne CEO, Tony Caruso, said: “The execution of our first Whole of Mine Operations contract is a major milestone for Mastermyne and is significant in transitioning the business into a commercial model that is not only complimentary to the existing contracting model, but will provide an even greater level of earnings certainty over the long term.”

Sojitz CEO, Cameron Vorias, said: “We are delighted to have Mastermyne as our highly regarded partner for this development and it will support our strategic plans for the growth of high quality hard coking coal from the area.”