Macmahon wins $170m contract at new mine

Tropicana gold project joint venture partners AngloGold Ashanti and Independence Group have approved the development of a new underground mine at a cost of $105 million.

A feasibility study on the Boston Shaker development confirmed that underground mining is economically viable, although the capital cost estimate is around $10 million higher than its December 2018 pre-feasibility study on the project.

The joint venture awarded Macmahon Holdings a five-year services contract for the underground mine.

Macmahon said it estimates the works to commence in May and be worth around $170 million.

Macmahon chief executive Michael Finnegan said the company was excited to continue its partnership with the JV at Tropicana, where it had been operating the surface mining since 2012.

“This contract win is a major step towards our strategic goal of growing our underground business and capitalising on the increased level of underground opportunities with existing and potential new clients,” he said.  

Macmahon will continue to operate the open mines under the agreement.

AngloGold said the underground development would maintain Tropicana’s production at between 450,000 and 500,000 ounces per annum over the next five years, with the average annual output over this period expected to be 480,000oz.

First gold is scheduled for the September quarter next year.

AngloGold’s international chief operating officer Ludwig Eybers said underground mining at Boston Shaker would leverage further value from the operation, achieving payback in just over three years.

“An ongoing focus on operational excellence has enabled Tropicana to consistently exceed expectations, and I am sure this world-class performance will extend into the underground operation,” he said.

Shares in Macmahon were flat at 22 cents each at 1.20pm AEDT.

Shares in AngloGold were down 7.20 per cent to trade at $3.74 each at 1.30pm AEDT.

Shares in Independence Group were down 0.3 per cent to trade at $4.80 each at 1.30pm AEDT.