Zenith preferred in Tanami build

Belmont-based Zenith Energy has been selected as preferred contractor to build a 62-megawatt power station at Newmont’s Tanami gold mine, edging out incumbent provider Pacific Energy. 

Zenith was selected as preferred bidder to build own and operate a 52MW gas power station with 10MW of diesel back up generation, which is anticipated to switch on in the first quarter of 2019.

The mine is located about 520 kilometres north-west of Alice Springs.

The 10-year contract (with a 10-year extension option) is still subject to negotiations, with discussions about a power purchase agreement still under way.

Zenith managing director Hamish Moffat said the company’s contracted build own operate capacity would be more than 170MW once the agreement was concluded.

Shares in Zenith were up 9.8 per cent to 73 cents each at the time of writing.

It comes just days after Landsdale-based Pacific Energy announced it had been unsuccessful in its bid to win the gas power station work.

Pacific had supplied power at Tanami since 2001, reportedly though two diesel power generators with 34MW of capacity.

The company will remain on site until a new gas pipeline is built and the new power station commissioned, and then will be able to redeploy its Tanami assets at other locations.

Pacific managing director Jamie Cullen said it was unfortunate a competitor had been chosen but that the company was still on track to meet earnings before interest, tax, depreciation and amortisation guidance of $43 million to $44 million in the current financial year.

“Based on our expanding order book, and planning, we expect to secure replacement capacity by the time the new power stations are operational,” Mr Cullen said in a statement.

Shares in Pacific were up 3.7 per cent to $5.55 today after dropping more than 10 per cent to 53 cents following its announcement on Tuesday.