GR Engineering has signed a letter of intent (LOI) with Gascoyne Resources for an engineering, procurement and construction (EPC) contract for a minerals processing facility at the Dalgaranga gold project in Western Australia.
The agreement outlines that GR engineering will start work immediately on the front-end engineering design (FEED) and early initiation activities related to the design and construction of a 2.5 million tonnes per annum processing plant, as well as associated infrastructure.
Award of the contract is conditional on Gascoyne’s board confirming the project will go ahead, final statutory approvals and financing agreements. Gascoyne and GR Engineering expect a contract to be formally announced in the coming weeks.
The yet to be disclosed project value will be undertaken on a guaranteed maximum price basis, according to the two companies.
Gascoyne managing director Mike Dunbar said the LOI was an important step forward for the company as it moved towards production.
“The feasibility study that we completed in November envisaged an ECPM implementation strategy; however this would have come with cost risk,” Dunbar said.
“The board decided to further de-risk the development by moving to a GMP style of implementation.”
Gascoyne recently completed a $50 million capital raising to help fund development of the Dalgaranga project. The project is about 70 kilometres northwest of Mt Magnet in the Murchison gold mining region of WA.
GR Engineering managing director Geoff Jones said the company originally established a working relationship with Gascoyne in 2012.
“The award of the LOI will enable GR Engineering to continue assisting Gascoyne advance this highly prospective Dalgaranga project through its final pre-development activities and into detailed design and construction,” Jones said.
Earlier this month, GR Engineering also signed a LOI with Dacian Gold for the EPC contract at its Mt Morgans gold project in WA.