Capricorn lines up GR Engineering for $93m gold contract

The Karlawinda project

GR Engineering has been named as the preferred tenderer to design and construct a processing plant for Capricorn Metals at the Karlawinda gold project in Western Australia.

The scope of the proposed engineering, procurement and construction (EPC) contract will include a 3 million tonne a year (Mt/y) processing plant and associated infrastructure at the Pilbara site.

Under a letter of intent, GR has been engaged to commence early engineering works ahead of launching the EPC contract, which will be on a fixed price basis.

The contract price is expected to be $93.1 million, with work to start once Capricorn has secured the required approvals and funding for the operation. The forecast contract value is 23 per cent lower than the $120.8 million estimate in Capricorn’s feasibility study from last October.

Capricorn chairman Heath Hellewell described the agreement with GR as another major milestone in the company’s journey to become a new gold producer.

“GR Engineering has an excellent reputation for delivering projects efficiently and on time and on budget, and we are delighted to announce their appointment as our preferred contractor,” Hellewell said.

“By embarking on the tender process and implementing a fixed-price solution, we have also been able to secure a significant reduction in the capital cost of the project.

“This is a very important step which further de-risks the development of Karlawinda and places us in a strong position as we move to secure project financing.”

Capricorn will now work towards a final project decision by the middle of the year, with an aim of first gold production in the September 2019 quarter. It plans to launch site-based activities under the contract with GR in the September quarter.

GR managing director Geoff Jones commented: “Our clients are increasingly seeking certainty and a track record of performance, and GR Engineering has been able to demonstrate this to Capricorn, including by reference to its recent successful project outcomes in the turnkey design and construction of mineral processing plants in the Western Australian gold sector.”

The Karlawinda gold project, which Capricorn acquired from IGO for $12 million in February 2016, is 65km from Newman in the Pilbara. The project currently has estimated resources of 38.3Mt at 1.1g/t gold for 1.326Moz of gold.

Once developed, Karlawinda has been forecast to become a 100,000oz/y mine.

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