Sandfire Resources awarded a new contract for underground mining services at its DeGrussa copper-gold mine in Western Australia to specialist underground mining contractor Byrnecut Australia Pty Ltd. The contract, which has an estimated value of $200 million, has been awarded following a competitive tender process. The tender was undertaken ahead of the expiration of the existing contract with Australian Contract Mining Pty Ltd. (ACM).

The new DeGrussa underground mining contract has a three-year term, with Sandfire having an option to extend for a further two years. It is the single largest operational contract at DeGrussa, employing approximately 150 people and using some 30 items of underground mining equipment and associated surface support.

The implementation of the new contract is expected to reduce gross mining costs at DeGrussa by more than 10%. This will see a reduction in anticipated mining, decline development and underground sustaining capital. This anticipated reduction in mining costs is consistent with ongoing efforts by Sandfire’s management to reduce costs, improve efficiencies and streamline all aspects of the DeGrussa operation. It also reflects the lower contract rates currently being experienced across the Australian resources sector.

Sandfire Managing Director and CEO Karl Simich said Sandfire was looking forward to working with the Byrnecut team to continue to build on the strong, efficient and safe underground mining practices in place at the DeGrussa underground mine.

“I would like to take this opportunity to thank ACM for their significant contribution to the success of the DeGrussa operation over the past three years during the underground mine development and the successful ramp-up of the operation to a steady-state level of 1.5 million tons per year.

“We want to build on our excellent track record at DeGrussa to ensure that we remain one of Australia’s most efficient, profitable and safe underground mines for many years to come,” Simich added.

Sandfire Chief Operating Officer Michael Spreadborough said the company had established an implementation team to work closely with Byrnecut and ACM to assist in managing a seamless and efficient transition with limited disruption to mining operations and production.

“Once Byrnecut is fully established at site, we will be working with them to further strengthen all aspects of our underground operations including productivity initiatives and safety systems,” he said.