Leighton lose Challenger gold mine contract

Leighton have lost a contract to provide the full range of underground mining services at the Challenger gold mine, a project worth an estimated $275 million.

Managing director of Kingsgate, Gavin Thomas told Australian Mining the mining contractor would finish work at Challenger on the 31st of July.

The news comes as Kingsgate also announced it is moving to implement a new mine plan aimed at reducing operating costs.

The new mine contractor has not yet been announced.

Leighton were contacted multiple times for comment but was unavailable at the time of publication.

Leighton started work at the mine in 2004, and according to their website have produced 600,000 tonnes of gold ore mined per year.

Earlier this year BHP Billiton axed a contract with Leighton, replacing the mine contractor with a smaller company as it moves to cut costs.

Leighton said it would be entitled to compensation for the early termination of the contract.

The company expects to lose more than $260 million of work over the next two years as a result of the decision.

However it’s not all bad news for the mining contractor.

The company secured its largest ever single contract with Fortescue Metals Group awarding a $2.8 billion contract in June.

The deal is for the development of Fortescue’s Kings deposit at the Solomon Hub in Western Australia, adding $1.3 billion work of work to Leighton’s existing $1.5 billion contract awarded in September to mine the Firetail deposit.

Leighton said in May it is unfazed by the effects of mining services companies downgrading profit forecasts.

“The benefit of the Leighton group is we have incredible diversification across geographic range and across sectors,” chief Hamish Tyrwhitt said.

“It’s just not in mining but in company development (and) infrastructure.”

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