Mining services firm Perenti (ASX:PRN) via its surface mining business African Mining Services has been awarded the US$235 million contract for open pit mining services at Sandfire Resources’ (ASX:SFR) A4 open pit within the larger Motheo Copper Mine in Ghanzi, Botswana.
The contract, valued at A$360 million over a term of 73 months, means AMS will deliver all surface mining services associated with development and production activities at the A4 open pit.
A4 is located some 8km to the west of the Sandfire’s existing T3 open pit, where AMS has progressed from development into production works.
Perenti anticipates A4 pre-production and development work to begin in September 2023, with pre-strip mining to start in October 2023.
The T3 and A4 open pits are expected to be operated as a larger, integrated mining operation and therefore will leverage the resulting benefits of scale and the operational synergies to optimise the return on capital aligned with our financial targets.
Perenti reports that the primary synergies include the optimisation of existing infrastructure, mining equipment, maintenance facilities and both technical and operational management.
The $726.51 million market capitalisation mining services company’s current FY24 guidance already takes these operational synergies and capital efficiencies into account and includes the respective A4 revenue and earnings, although as with every opportunity we will be looking to generate further value for our client and shareholders.
Addressing the award of the contract, Perenti Managing Director and Chief Executive Officer Mark Norwell notes: “Motheo is a long-life asset in the Kalahari Copper belt, and the expansion of our role here is in keeping with our strategy of disciplined growth within top-tier mining jurisdictions with high quality partners.
Sandfire is now one of our largest clients and over the term of the combined contracts, the T3 and A4 open pits are expected to generate total revenue of over $1.1 billion, delivering strong returns for Perenti and its shareholders.”
Paul Muller, President of Contract Mining adds: “Since Barminco commenced operations in 2019 and AMS later in 2021, Perenti has established itself as the leading international mining contractor in the Kalahari Copper belt.
With the award of our third mine in the region, we look forward to playing our part in Sandfire’s expansion of their world class Motheo Copper Mine. Beyond this, I am proud of the contribution Barminco, AMS and Perenti continue to make to the development of Botswana’s mining industry and the community more broadly.”
Motheo is Sandfire’s new, long-life asset located in the central portion of the Kalahari Copper Belt in Botswana. The Motheo operations are centred on the development and mining of the T3 and A4 open pit mines and were officially opened in August 2023.
With a central processing facility, Motheo produces ‘high-quality’ copper concentrate (containing a silver by-product) that is transported by truck to Walvis Bay, Namibia, for shipping to smelters around the world. The operations are supported by our community office in the nearby town of Ghanzi, which is the focal point for managing human resources and community relations in the Ghanzi District.
5.2Mtpa Motheo expansion
Sandfire completed a Definitive Feasibility Study (DFS) for the Motheo expansion project in August 2022. The DFS highlighted the strong economics that would be generated by the expanded 5.2Mtpa operation, which includes development and mining of the A4 deposit, located 8km to the west of the Motheo processing facility and T3 open pit.
With the final permitting milestone for the expansion completed recently, development and mining of the higher grade A4 deposit has commenced. The Motheo low-cost, rapid expansion will see processing capacity increase sustainability from the initial rate of 3.2Mtpa to 5.2Mtpa by the end of CY2023, with the project’s design and procurement activities significantly advanced.
Headquartered in Australia, Perenti operations and offices across 11 countries and are involved in some of the world’s largest mining projects. It has a global workforce of close to 8,000 people.
Write to Adam Orlando at Mining.com.au
Images: Perenti & Sandfire Resources
