MMG has made the decision to terminate its engineering, procurement, and construction contract with Forge at its Dugald River mine’s processing facility.
According to the miner “complexities in the Dugald River project’s ore body have been identified, prompting a review of the planned mining method”.
“To focus resources on the mine method review and manage short term capital expenditure, the company has decided to suspend most earthworks at the project site. This includes ongoing engineering,procurement and construction of the processing facility for the Dugald River project.”
MMG gave Forge notice of the decision late yesterday, and will officially terminate the contract on September 26.
Additional surface work such as the construction of the permanent accommodation camp and bulk earthworks has also been suspended.
Forge confirmed the MMG decision, but stated that it is unlikely to have a major impact on the company’s revenue and earnings for FY14, as most of the work was to be done in FY15.
David Simpson, Forge’s managing director,stated that “whilst this decision is regrettable, Forge Group has been very successful in strengthening its work in hand with almost $1.6 billion worth of new projects awarded in the last month; this underpins our confidence for FY14 and into FY15”.
MMG went on to state that “the review of the Dugald River project is expected to be completed by the end of 2013”.
“Accordingly a final investment decision regarding the development of the Dugald River project will only be made once this review is completed.”
There is no word on whether MMG’s decisions will affect existing mining contracts with Barminco.