Resource and development company Group 6 Metals (ASX:G6M) reports its redevelopment of the Dolphin Tungsten Mine in Tasmania is progressing well despite an unexpected cost increase for an engineering, procurement, and construction (EPC) contract.
EPC contractor Gekko Systems advised the company constraints including market conditions impacting logistics, materials, installation costs, inflation, shipping and transport costs, foreign currency exchange rates, and labour constraints have caused an unexpected cost increase for the contract.
The extent of the newly anticipated construction costs is up to $7.5 million, which the company says constitutes about 14% of the value of the EPC contract, or 8% of the overall project capital expenditure.
The project remains on track for completion and for first production of concentrates in early 2023
Despite this setback, Group 6 Metals reports the project remains on track for completion and for first production of concentrates in early 2023.
In the meantime, the company says it is taking joint action with Gekko to mitigate these anticipated cost increases while optimising the safety, and schedule of the Dolphin redevelopment.
Both companies are also in discussions regarding options to limit the impact of these anticipated cost increases on Group 6 Metals’ cashflow while the plant is being commissioned and ramping up to nameplate production.
Moving forward, Group 6 Metals will restart drilling at Dolphin next week. The company has also decided to extend the closing date for the ongoing share purchase plan (SPP) until 1 February 2023.
This will allow shareholders who have made an application for shares under the SPP time to amend or withdraw their application. A supplementary prospectus for the SPP will also be released by the company in the coming days. The SPP, which is targeting to raise a maximum of $3 million, was originally slated to close on 18 January.
Group 6 Metals is an Australian resources exploration and development company focused on redeveloping the Dolphin Tungsten Mine, located on King Island in Tasmania.
First production for tungsten concentrate at the project is expected to commence early this year. This product will be used in a variety of industries including mining and construction, transport, chemical and petrochemical, consumer durables, energy, and defence, as well as medicine, and pharmaceuticals.
Images: Group 6 Metals Ltd
