Sandfire Resources has continued the rapid development of its $384 million DeGrussa copper-gold project, signing up Abesque Engineering and Australian Contract Mining to provide mining services and a processing plant.
Sandfire Resources has continued the rapid development of its $384 million DeGrussa copper-gold project, signing up Abesque Engineering and Australian Contract Mining to provide mining services and a processing plant.
Sandfire released a definitive feasibility study for DeGrussa today, which forecast production averages of 77,000 tonnes per annum of payable copper metal and 36,000 ounces per annum of payable gold over the first three years of operations.
At those production levels, the project would generate $730 million each year in revenue, Sandfire said.
The feasibility report put pre-production capital costs at $384 million, comprising $268 million for plant and infrastructure, $44 million for open pit mining, $56 million for underground mine development and $17 million for other pre-production costs.
The study flagged life-of-mine revenue of $4.2 billion.
Sandfire managing director Karl Simich said the study demonstrated the robust economics of the DeGrussa prjoject.
"Of particular note is the forecast for the project to generate revenue in excess of $2 billion and pre-tax operating cash flow of over $1.3 billion over the first three years of operation," Mr Simich said.
"With open pit and underground development having commenced during April 2011, our key contracts let and a high quality team in place, project development is moving into top gear with over 200 people already on site.
"This will increase to over 400 as construction proper gets under way and the funding package is completed."
Meanwhile, Sandfire has awarded underground mining services and processing plant contracts collectively worth $194 million for DeGrussa.
Australian Contract Mining will begin a three-year underground mining services contract in june, in a deal worth $129 million.
Sandfire said it held an option to renew the contract for a futher two years on the same terms and conditions.
Also, Forge Group subsidiary Abesque Engineering has won a $65 million contract for the design, supply installation and commission of processing facilities at DeGrussa.
The plant will have a 1.5 million tonne per annum capacity and produce 230,000 dry tonnes of copper concentrates each year.
Site works are scheduled to kick off in September, with the plant aimed to be completed by August 2012.
Mr Simich said he was pleased to have been able to award the contracts to two West Australian companies.
"We are looking forward to working with ACM and Abesque in delivering these very important components of the DeGrussa project," Mr Simich said in a statement.
"The underground mine will form the centrepiece of the DeGrussa operation once the initial open pit operation is concluded, and we expect to be mining underground for many years into the future.
"We look forward to establishing a strong and co-operative relationship with ACM to establish an efficient and productive underground mining operation."
At 12:08AM (WST) Sandfire shares had gained 2 cents to trade at $6.95
