Following an independently managed contractor tender process, the underground operations at Centamin’s Sukari gold mine, in Egypt, will transition from contractor mining to owner-operator mining with immediate effect.

Centamin says this change will deliver significant cost savings and will improve operational control and mining flexibility, while also enabling the company to upskill the local workforce.

This decision, following the expiry of the current five-year contract, has been based on several factors.

Firstly, the 200% increase in Sukari underground proven and probable reserves, as announced in December 2021, underpins an eight-year underground life-of-mine (LoM), with identified near-term growth targets to extend beyond a ten-year LoM.

Moreover, the operational leadership at Sukari has been significantly strengthened, with experienced underground expertise and increased investment in the development of the national workforce.

Also, an owner-operator model, including risk-based analysis against the submitted contractor-mining tender proposals, identified significant operating synergies for the broader Sukari operations.

Further, the transition to owner-operator mining is expected to generate long-term cost savings of about $19-million a year from 2023 onwards, compared with the 2021 cost base.

Lastly, 90 000 m of underground drilling is budgeted for the year, including identified near-term growth targets to extend the underground beyond a ten-year LoM and helping to support the underground expansion study that is due for completion in the second half of this year.

A detailed transition plan to owner-operator mining is in place with implementation under way, including using a third-party underground mining specialist to assist with workforce training.

The company has also executed its contractual right to buy the current underground mining fleet from the incumbent contractor for $10.5-million, to be paid this quarter.

Following the completion of an independent tender process, Centamin has awarded Geodrill a five-year contract to provide underground drilling services, including a minimum of 90 000 m of drilling a year and introducing reverse circulation drilling to the underground. The contract is to begin this quarter.

There is no change to the 2022 yearly production and cost guidance. As a result of buying the incumbent contractor’s underground mining fleet, the yearly capital expenditure guidance for 2022 is increased by $10.5-million to $225.5-million.