Following an independent contractor tender process, gold producer Centamin has confirmed it will transition underground operations at its Sukari gold operation in Egypt from contractor mining to owner-operator mining, effective immediately.
The company said in a regulatory filing that the adjustment will provide significant cost savings, and it also will improve its operational control and mining flexibility, including upskilling its local workforce.
Its most recent five-year contractor deal is now expired, and officials said the leadership skill of its crew at Sukari has strengthened and underground expertise grown. It expects to save an average $19 million annually from 2023 onward versus its cost base for 2021 by going owner-operator.
Centamin said it has a detailed transition plan in place with implementation under way, including utilising a third-party underground mining specialist to assist with workforce training. The company has also executed its contractual right to purchase the current underground mining fleet from the incumbent contractor for a total capital cost of $10.5 million that will be paid this quarter.
For drilling underground, the mine’s owner has opted to award Geodrill Limited a five-year contract for its services, including a minimum of 90,000 metres of drilling per annum and introducing reverse circulation drilling to the underground, which is faster and enables larger samples to be taken. That contract will also commence this quarter.
“The decision to transition the underground to owner mining reflects extensive planning and evaluation to determine the most effective operating model as we continue to grow and maximise the value of the Sukari orebody,” CEO Martin Horgan said.
“Following a 200% increase in underground reserves with further identified growth opportunities and an underground expansion study under way, we believe this move best places us to extract the maximum value safely, efficiently and cost-effectively from the expanding underground operations.”
Sukari is Centamin’s flagship asset. Known as Egypt’s largest and first modern gold operation, it commenced production in 2009 and has a 12-year projected remaining mine life.