GR Engineering wins $74m contract

Ascot-based GR Engineering Services has been contracted to build a sulphide flotation and processing plant for Galena Mining’s base metals project in Western Australia.

The Abra lead-silver project, located between Newman and Meekatharra, is operated by Galena’s 86 per cent-owned subsidiary, Abra Mining, and Japanese company Toho Zinc, which holds the remaining 14 per cent interest in the joint venture.

The contract is valued at $74 million and involves engineering, procurement and construction works for the processing plant, which will supply 1.2 million tonnes of lead sulphide per annum.

Galena managing director Alexander Molyneux said GR Engineering had the most relevant experience and understanding on the project on terms that were in line with Galena’s feasibility study estimates.

The company released results from a bankable feasibility study for the Abra project mid-last year, which confirmed a 16-year mine life producing around 95 kilotonnes of lead and 805 kilograms for every ounce of silver per annum.

Pre-development capital costs were valued at $170 million.

GR Engineering, which had already been involved in the project’s feasibility study and preliminary design work, said it had begun early engineering works under the new contract.

The main works remain conditional on the close of project financing.

It follows GR Engineering’s announcement on Friday, confirming it had recognised impairment to its first half year financial results as an outcome of its contract with a subsidiary of Northern Oil & Gas Australia.

GR Engineering had entered into an operations and maintenance services agreement with Timor Sea Oil & Gas Australia (TOGA), which entered into voluntary administration in September 2019.

After emerging from a trading halt in October, GR Engineering said it expected financial exposure to TOGA to be around $17.4 million, which the company confirmed today.

GR Engineering shares were up 1.11 per cent at 11:10pm AEDT to trade at 90 cents per share.