Drillers bid for Mt Charlotte contract

A consumables contract up for grabs at KCGM’s Mt Charlotte underground mine has got drilling companies clambering over each other bidding for the opportunity which is reportedly worth more than $20,000 per month.

The highly competitive mining services sector is facing increasingly tough times, resulting in companies scrambling to submit their best bid before the KCGM tender process closes today, The West Australian reports.

The contract is said to be worth about $250,000 per annum, which in boom times would’ve been considered meagre, however a drop in exploration budgets and a slow down in the drilling sector is fuelling urgency among suppliers.

The West Australian reports drilling company Boart Longyear has held the contract for about 35 years.

Research released by  financial firm Ernst and Young this week estimates about a quarter of all mine contracts are up for renewal this year, and with miners focussed on austerity measures and driving up productivity EY Asia-Pacific mining and metals transactions leader Paul Murphy said those businesses able to diversify and improve productivity would be best placed.

KCGM confirmed the contract was up for renewal but "for confidentiality reasons" would not confirm its value nor disclose the companies tendering.

Among those expected to bid include Sandvik Mining, Ryoco Sangyo Corporation, LHS Rocktools Australia, Atlas Copco, Brunner and Lay Australia, and Mitsubishi Materials.

The Mt Charlotte mine has been operational for 50 years, generating about generates approximately 30,000 ounces of gold per year, making up about 5 per cent of KCGM’s total gold ounces each year.

The gold price has fallen significantly since hitting highs of $US1900 an ounce in September, today gold prices have tumbled to sit at $US1,285.70 an ounce.

The drop is forcing project cancellations, and mass lay offs in the sector; both Barrick Gold and Newcrest have taken the axe to jobs across their operations, and WA gold miner Apex Minerals has this month gone into administration.

KCGM also operates the Kalgoorlie-Boulder Superpit, announcing last month low gold prices and high production costs have forced them to run cost reviews in order to keep the mine viable.

Russell Cole, KCGM’s general manager, said changes would be necessary in ensuring the Superpit remained a viable gold producer.

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.