Galena Mining Ltd (ASX: G1A) has confirmed that Abra Mining Pty Limited (AMPL), the joint-venture company for the Abra Base Metals Project, has awarded an engineering, procurement and construction (EPC) contract to GR Engineering Services Limited (GRES) for the supply of a 1.2 million tonne per annum lead sulphide flotation process plant and ancillary infrastructure.
Galena Managing Director, Alex Molyneux, said the EPC contract is in the form of a guaranteed maximum price (GMP) contract in the value of approximately A$74 million, with a sharing of cost savings between GRES and AMPL below the GMP level.
“I am pleased we have been able to retain GRES, which has the most relevant experience and understanding of our project, on terms that are in-line with our Feasibility Study estimates.”
GRES is a leading Australian engineering and contracting company that specialises in providing high quality engineering design and construction services to the mining and mineral processing industries.
GRES was the EPC contractor in some of Australia’s most successful sulphide base metals projects, including Nova Nickel and Rasp Mine.
The company also has extensive knowledge of Abra, having been involved in the Feasibility Study completed in July 2019.
Mr Molyneux said certain components of the EPC works, up to a capped exposure level, have already commenced. However, the main EPC contract remains conditional on financial close on the proposed project financing debt facilities.
86.16% owned by Galena, the Abra Base Metals Project is a globally significant lead-silver project located in the Gascoyne region of Western Australia.
Galena completed adefinitive / bankable feasibility study in July 2019 for development of a mine and processing facility with a 16-year life producing a high-value, high-grade lead-silver concentrate containing approximately 95kt of lead and 805koz of silver per year after ramp-up.
Based on a pre-development capital expenditure estimate of A$170 million, the FS modelled a pre-tax net present value for Abra (at an 8% discount rate) of A$553 million and an internal rate of return of 39%.