GOLD Fields today reported a 10% slippage in the capital cost estimate for its Gruyere gold mine, held in joint venture with Gold Road Resources, an Australian-listed gold development firm.
A new Final Forecast Capital Cost (FFC) estimate, which calculates the capital cost of the project to the end of commissioning, is now at A$621m compared to the A$562m estimate in June 2017. The two estimates include a A$30m contingency fee and force majeure cost, the latter relating to “… extreme 2018 rainfall events”.
Reflecting the improvement in the commodity market since Gold Fields first unveiled the joint venture in November 2016, the increase in the contingency also includes expanding the Project Owners’ Team in order to retain key staff. The labour market had become tighter, Gold Fields said.
The June quarter target for first production was unchanged.
Gold Fields bought 50% of the Gruyere gold project in Western Australia from Gold Road Resources for A$350m ($268m).
Located in Australia’s Yamarna Belt, roughly 200km east of Laverton in Western Australia, the project contains 3.5 million ounces of gold in reserves (6.2 million oz in resources) and is expected to yield production of about 260,000 oz/year for 13 years at an all-in sustaining cost (AISC) of A$945/oz ($725/oz) and all-in costs (AIC) of A$1,103/oz ($847/oz).
All long‐lead items for the Gruyere process plant, including SAG and Ball mills, have been transported to site from Perth and are awaiting installation by the EPC contractor, Amec Foster Wheeler Civmec Joint Venture (ACJV), Gold Fields said in an announcement today.
Construction of a 198 kilometre Yamarna Gas Pipeline has been completed ahead of budget whilst the bulk of staff employed under the project’s mining services contractor, Downer EDI, are due to descend on the project in December in time to start pre-strip activities on the Gruyere open pit in early 2019, Gold Fields said.
The construction workforce was currently at 440 people but it was planned to reach 600 people during the September quarter. All in all, 94% of overall project engineering and construction was 94% and 61% complete respectively, whilst EPC construction was 39% complete as of July 27.
Gold Fields will become the manager of the project six months after completion on a ‘no profit/no loss’ basis in which a management fee will be paid to Gold Fields to recover overhead costs.
“Gruyere will add material reserves and resources, margin and cash flow into what is already a strong region for Gold Fields and which has proven its ability to integrate new operations with ease,” said Nick Holland, CEO of Gold Fields at the time of announcing the joint venture with Gold Road Resources.
“We are excited about partnering with Gold Road and are hopeful this is the start of a multi-decade, mutually beneficial relationship and see significant potential synergies in resourcing, intellectual property, procurement and technical skills,” he said.
