Dacian Gold lines up Macmahon for $250m Mt Morgans contract

Heffernans Hill at Mt Morgans. Image: Dacian Gold

Macmahon Holdings has received a letter of award for a mining contract worth at least $250 million at Dacian Gold’s Mt Morgans gold operation in Western Australia.

The mining services agreement for Mt Morgans’ Jupiter open pit is the final contract that Dacian needs to award before production is launched at the operation in March next year.

Dacian plans to start open pit mining at Mt Morgans this month, with first ore to be mined from the Heffernans Hill area, which is now cleared and where grade control drilling is under way.

The five-year contract, which the two companies expect to sign in the coming weeks, will see Macmahon provide drilling and blasting, loading, hauling and technical services.

Macmahon will move more than 100 million tonnes (Mt) of material over an initial five-year term under the contract terms, generating around $250 million in revenue. There is also an option to extend the contract by another 31 months following the initial period.

Dacian chairman Rohan Williams said the company was on the countdown to production and cashflow.

“Project construction is progressing rapidly, with the carbon-in-leach (CIL) treatment plant now over 75 per cent complete, underground mining 743 metres ahead of schedule and eight drilling rigs operating around the site,” Williams said.

“And now we have secured Macmahon as the open pit mining contractor, with mining at Heffernans to start this month.

“With a production rate of 200,000 ounces a year, Mt Morgans will be the biggest gold mine to come on line in Australia for six years.”

Macmahon has announced the letter of award from Dacian a day after confirming it had secured a $350 million contract at the Byerwen coal project in the Bowen Basin of Queensland.

Michael Finnegan, Macmahon chief executive officer, described Mt Morgans as an exciting project that the contractor had been following for some time.

“To receive this letter is extremely gratifying and we look forward to delivering this project for the benefit of both parties,” Finnegan said.

“Throughout the tender process we have built a trusted relationship with Dacian Gold, and today’s announcement is a testament of the value-driven proposition that Macmahon has been able to offer.”

Macmahon’s recent contract wins also continue the company’s turnaround since it was the target of a failed takeover attempt by CIMIC Group earlier this year.