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Gold Road/Gold Fields JV flags Gruyere delay, possible cost increases - Mining Weekly

Monday, 23 April 2018

PERTH ( – The Gruyere gold project, in Western Australia, is likely to be late in delivering its first gold, project developers Gold Road Resources and Gold Fields have warned, with the companies also flagging possible cost increases.

The joint venture (JV) partners said on Monday that the abnormal weather events during the March quarter had impacted on the project schedule and costs, with first gold now likely to be poured in the June quarter of 2019, rather than the March quarter of 2019, as previously forecast.

The project’s capital cost estimates have also increased to the upper end of the forecast range of between A$506-million and A$585-million, compared with the previous budget of A$532-million.

The causes of the potential cost increases are now being reviewed for classification as either a scope change, force majeure due to weather issues, or cost overruns.

Under the terms of the JV agreement, Gold Fields will be responsible for the first $50.1-million of project cost overrun, which will exclude a scope change or force majeure costs.

The JV parties noted that in addition to weather events and schedule extension related costs, a provision review of the definitive estimate has also identified capital cost changes to the tailings storage facility design, increases for some equipment in the engineering, procurement and construction (EPC) contract, scope changes in the final design of the process plant and facilities, increased quantities in bulk earthworks, changes in owner's team costs and logistics costs, and increased spares and first fills.

“Despite challenging weather conditions, the project is progressing as well as possible,” Gold Fields executive VP for Australasia, Stuart Mathews, said in a statement.

“We have focused on completing the important definitive estimate, now that we have reached the advanced stage of project engineering. Despite the impact of the abnormal weather in the March quarter, action from all parties on site to seek solutions and deal with resulting delays in a positive manner, keeping the project as close to schedule as possible, has been extremely encouraging,” he said.

At the end of the March quarter, the overall project engineering and construction was 84% and 44% complete respectively, with EPC of the process plant and associated infrastructure some 17% complete.

The Gruyere plant will have a capacity to handle 7.5-million tonnes a year of fresh ore, and up to 8.8-million tonnes a year of oxide ore, over a mine life of 13 years.

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