Tag Archives: King of the Hills

Redpath on board with Red 5’s Darlot, King of the Hills plan

Red 5 Ltd has awarded a mine development contract for its Darlot gold mine in Western Australia to Redpath Australia.

The contract, which has been awarded following the completion of a competitive tender process, is for 12 months with an option to extend at six-monthly intervals. The initial contract value is A$13 million ($9 million) and will be funded by cash flow from the Darlot operations.

The Redpath mining team and equipment have mobilised at site and underground mine development commenced on October 1, 2021.

Consistent with the revised Darlot mine plan and King of the Hills processing hub strategy announced on August 2, 2021 – which will see Darlot ore processed at the King of the Hills processing plant – Redpath will be undertaking 3 km of rapid underground mine development at Darlot, separate from the mining activities being conducted by Red 5’s existing mining teams. This will provide access to new mine areas in Burswood, Pedersen, Middle Waters South and Thompson that underpin Darlot’s current mine plan to June 2023, Red 5 says.

The option to extend the mine development contract would open further additional mining areas within Darlot’s 1.2 Moz underground mineral resource, the company says.

The recently announced transition strategy for Darlot will see it become an underground satellite mine to the King of the Hills Processing Hub, with the new processing plant expected to produce first gold in the June Quarter 2022. It will also see the processing capacity rise from the previously envisaged 4 Mt/y (for solely King of the Hills ore) to 4.7 Mt/y.

The investment in mine development at Darlot is a key aspect of the transition strategy at Darlot, reducing dependence on remnant mining and opening up new mine areas, the company says.

“The lower cost base of the King of the Hills processing hub has the potential to extend the Darlot underground mine life for several years,” it added.

Macmahon defies labour tightness to bolster contract mining order book

Macmahon Holdings Ltd has added around A$1.35 billion ($988 million) of work to its order book with the signing of three previously flagged contract mining gigs, plus announced the addition of surface mining work at Northern Star Resources’ Julius gold project in Western Australia.

The three projects making up the A$1.35 billion of contract mining works are the 5-year agreement with St Barbara Ltd at the Gwalia gold mine, a three-year pact with Anglo American at Dawson South and a five-year contract with Red 5 Ltd at King of the Hills.

The contract with Northern Star Resources at Julius is expected to deliver revenue of A$25 million over the next 12 months. Production from the Julius deposit is expected to complement output from NSR’s Jundee operations.

In addition to these projects, Macmahon says it is well progressed in finalising the commercial arrangements for Phase 8 of its Batu Hijau copper-gold project in Indonesia, an operation owned by PT Amman Mineral Nusa Tenggara.

Macmahon commented: “While Macmahon has observed a tightening of the labour market in Australia over the past year, it can confirm that the Gwalia, Dawson South and Julius projects have commenced operations by the times required in those contracts.

“Macmahon has existing strategies for responding to challenges in the availability of labour, and believes it is well placed to continue to manage this operational issue into the foreseeable future, and to continue to deliver value for its clients.”

Commenting on today’s announcement, Macmahon CEO and Managing Director, Michael Finnegan, said: “Macmahon is continuing to build on its track record for delivery and to advance its growth strategy.

“It is very satisfying to have secured significant new work during financial year 2021, which provides us with a strong order book and excellent earnings visibility for FY22 and FY23. The underground work at Gwalia and King of the Hills also adds scale to our underground business, which is an important step in our strategy to diversify Macmahon.”

Red 5 formalises KOTH contract mining pact with Macmahon

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.”

Red 5 taps Zenith Energy for hybrid power options at King of the Hills gold project

Red 5 Ltd has entered into a Power Purchase Agreement with a subsidiary of Zenith Energy Ltd that will see the growing Australia-based power producer build, own and operate approximately 30 MW of hybrid power generation capacity to service the needs of the King of the Hills (KOTH) project in Western Australia.

The power inputs as part of the BOO agreement comprise high efficiency reciprocating gas fuel power generation together with a 2 MW photovoltaic solar farm (an example from Zenith’s other work shown above) and a battery energy storage system.

Power supply to the site is planned to commence in the March quarter of 2022 with an initial term of 10 years. The contract includes provision for a potential future upgrade to the power station to support increased plant throughput beyond the initial planned 4 Mt/y run rate, Red 5 says.

Gas will be supplied from the Goldfields Gas Pipeline, 12 km west of the mine, under separate contracts, the company clarified.

Red 5 Managing Director, Mark Williams, said the award of the agreement marked another important construction milestone for the King of the Hills project while, at the same time, helping to achieve one of the company’s environmental, social and governance commitments to reduce the carbon footprint of the project.

“We are pleased to have signed the Power Purchase Agreement with Zenith, an experienced power producer which provided us with a compelling hybrid thermal and sustainable power solution that includes renewable energy,” he said. “Zenith’s combination of a gas and solar power station, supported by a battery energy storage system, provides the efficiency and stability required for the processing plant and infrastructure to enable King of the Hills to be a long-life, low-cost gold producer.”

The KOTH project is an open pit and underground gold deposit with a projected mine life of over 16 years. This could see the company produce 176,000 oz/y of gold over the first six years, according to a recent feasibility study.

Macmahon lines up open-pit/underground work at Red 5’s King of the Hills gold project

Macmahon Holdings Ltd has been awarded its second major contract in as many weeks in the Goldfields region of Western Australia, receiving a letter of intent to carry out contract mining services at Red 5 Ltd’s King of the Hills (KOTH) gold project.

The KOTH project is an open pit and underground gold deposit with a projected mine life of over 16 years. This could see the company produce 176,000 oz/y of gold over the first six years, according to a recent feasibility study.

Red 5 has commenced the construction of the camp and processing facilities on site and is planning for mining to commence in early 2022. First gold production is expected to occur in June 2022.

Just last week, Macmahon was appointed the underground mining contractor at St Barbara’s Gwalia gold mine at Leonora Operations in Western Australia.

Following a detailed tender process for both the surface and underground mining activities, Red 5 has issued a letter of intent to Macmahon for a proposal combining both scopes of work. Under the agreement, the parties are working to finalise the documentation by which Macmahon will provide all surface and underground mining services to the project over a five-year contract term, commencing in the March quarter of 2022.

Macmahon expects this documentation will be completed by June 2021 and that the contract will add over A$650 million ($497 million) to the company’s order book.

Macmahon’s CEO and MD, Michael Finnegan, said: “We are delighted to be in advanced discussions with Red 5 for its King of the Hills gold project in Western Australia. We have a strategy to expand our presence across the mining services value chain, and this project highlights the benefits of being able to offer a combined surface and underground mining solution from the outset. We look forward to continuing our relationship with the Red 5 team and supporting their development of this important project.”

MACA receives early call up for Red 5’s King of the Hills gold project

Red 5 Ltd says it has taken another key step towards the development of its King of the Hills (KOTH) project in Western Australia, after issuing a notice of award for the engineering, procurement and construction (EPC) contract and the bulk earthworks for the process plant to MACA Interquip.

The EPC contract and bulk earthworks – which encompass the KOTH processing facility, equipping of the bore fields, high voltage power distribution, workshop, warehouse and bulk earthworks – will be undertaken as a fixed‐price contract, Red 5 said.

The KOTH feasibility 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. The capital cost came in at A$226 million ($158 million) and life of mine all-in sustaining costs were A$1,415/oz.

MACA Interquip, a multi‐disciplined mineral processing provider, has a strong track record of the construction of similar carbon‐in‐leach processing plants to the 4 Mt/y process plant planned at KOTH, Red 5 explained.

Following execution of the EPC contract, commitments to‐date for the KOTH project will total A$143 million, compared with the capital budget of A$155 million for these items – which represent 82% of the total capital budget for processing infrastructure of A$188 million (excluding owners costs and contingency).

Commitments made to date include:

  • Purchase of 240‐bed camp accommodation, water and waste water treatment plants and central facilities;
  • Design and construction contract for a 450‐person village;
  • 6 Mt/y gyratory crusher and 4 Mt/y SAG mill;
  • Early works agreement with APA Group for the gas pipeline lateral; and
  • EPC contract for the process facility and bulk earthworks.

Construction of the village commenced in October 2020 and is on track to be operational in February 2021. The process plant bulk earthworks (for which equipment will be mobilised) are scheduled to commence on December 1, 2020, pending the final remaining permit (currently on schedule).

The EPC contract provides for two phases. The first is limited to A$50 million and Phase 2 is for the remainder of the contract value, which will be released at the discretion of Red 5, based on the status of debt financing.

The notice of award provides for the immediate commencement of the design and procurement activities for the process plant as well as mobilisation of earthmoving equipment to site, Red 5 said. It, however, limits commitments to A$10 million and is an interim measure to allow the plant design and mobilisation for earthworks to commence immediately while the contract is executed.

Once executed, the value of these contracts, together with the purchase of the 6 Mt/y gyratory crusher and 4 Mt/y SAG mill (already awarded to MACA Interquip), is A$129 million.

The purchased long‐lead items of the crusher and mill are currently being transported, in preparation for the planned delivery to Australia late in the June quarter of 2021.

The company is currently calling tenders for both the open pit and underground mining contracts, the independent power producer contract and the supply of gas. These contracts are expected to be finalised in the coming months, it said.

Red 5 Managing Director, Mark Williams, said: “Our decision to award these key contracts and make commitments to significant long‐lead items prior to completing project debt funding reflects our confidence in the robustness of the King of the Hills project.

“Importantly, the commitments made to date are below budget for this stage of the KOTH project, and should give our stakeholders confidence that we are well on track to progress the development of this major project, with production planned to start in June quarter of 2022.”