https://www.engineeringnews.co.za

Heron facing higher costs at Woodlawn

4th February 2019

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

Font size: - +

PERTH (miningweekly.com) – ASX-listed Heron Resources is facing a near A$50-million cost overrun at its Woodlawn base metals project, in New South Wales.

Heron on Monday reported that the company had received a A$49.9-million progress claim from contractor Sedgman, which was over and above the agreed upon A$109-million guaranteed maximum price engineering, procurement and construction (EPC) contract sum that formed the basis for the construction of the Woodlawn project.

The two companies in 2016 entered into a front-end engineering and design study, which was aimed at refining the design and price for the construction of the Woodlawn plant. In May 2017, the two companies inked the EPC contract, which included a guaranteed maximum price and cost sharing component.

Heron told shareholders that it made all payments agreed upon, and which were due under the EPC contract.

“The company is extremely disappointed to receive a claim of this magnitude when the construction timeline is effectively complete, and it would appear to run contrary to the underlying principles of a guaranteed maximum price style of EPC contract, which are well understood in the wider resources industry,” Heron said in a statement to shareholders.

The contract superintendent would assess Sedgman’s new claim within ten business days, but Heron noted that if it were to be accepted, it would result in the guaranteed maximum price being exceeded by 46%.

While the superintendent was assessing the merits of the claim, Heron would focus on progressing the development and commissioning activities as it worked towards meeting its first quarter production milestones.

At steady state, Woodlawn is expected to produce 70 000 t/y of zinc concentrates, 30 000 t/y of copper concentrates and 25 000 t/y of lead concentrates.

Edited by Creamer Media Reporter

Article Enquiry

Email Article

Save Article

Feedback

To advertise email advertising@creamermedia.co.za or click here

Showroom

Alco-Safe
Alco-Safe

Developed to exceed the latest EN 15964 standards for police breathalysers proving that it will remain accurate and reliable for many years to come.

VISIT SHOWROOM 
Rittal
Rittal

Rittal is a world leading provider of top-quality integrated systems for enclosures, power distribution, climate control, IT infrastructure and...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







301

sq:0.059 1.033s - 140pq - 2rq
Subscribe Now