Gruyere gold JV locks in power contract with APA

Gold Road's Gruyere site

Infrastructure company APA Group will construct a new gas transmission pipeline and gas-fired station to supply power to the Gruyere gold project in Western Australia as part of a 15-year, $585 million contract signed with the joint venture developing the operation.

Gold Road, which is advancing the Gruyere prospect with Gold Fields, today confirmed the design, build, own and operate contract with APA for the 198km pipeline and the 45MW gas-fired power station had been signed.

APA will invest about $180 million in the project, which it will recover over 15 years through a gas transportation and electricity supply agreement.

Gas will be transported almost 1500km to the Gruyere site using four APA interconnected gas pipelines: Goldfields Gas Pipeline 1, Murrin Murrin Lateral, Eastern Goldfields Pipeline and the Yamarna Gas Pipeline.

The minimum cost of the agreement is about $215 million, according to Gold Road, with the expenditure over the 15 years estimated at about $585 million.

Commissioning of both the pipeline and power station is expected by late 2018, to align with the Gruyere JV’s plan to launch production by early 2019.

APA chief executive officer and managing director Mick McCormack said the agreement was a compelling energy solution for the Gruyere JV.

“We built and commissioned the Eastern Goldfields Pipeline 18 months ago, and the Gruyere JV will be the third customer to take advantage of our interconnected pipelines in this region to provide a safe and reliable energy solution – as an infrastructure owner, you want to see your assets worked hard,” McCormack said.

Gold Road also reported that a review of the project’s feasibility study had resulted in several improvement and enhancements, with development costs revised to $532 million.

The JV believes it will now deliver a more robust project with improved operational ergonomics and maintainability, advanced process plant controls, and more consistent metallurgy recovery following the review. Gruyere will now also comply with the International Cyanide Management Code.

Gold Road CEO Ian Murray said the work delivered by the project team had enabled the JV to achieve a fixed price, lump sum EPC contract, schedule of rates bulk earthworks contract and the ground-breaking power contract.

“We all understand the importance of job creation and beneficiation in WA, and in the project area for the local communicities, and we commend our contractors for opportunities they have created,” Murray said.

Gruyere is in the Yamarna greenstone belt of WA, 200km northeast of Laverton in the Goldfields region.