MMG cancels A$290m Dugald River EPC contract
PERTH (miningweekly.com) – Hong Kong-listed MMG has terminated a A$290-million engineering, procurement and construction (EPC) contract with project house Forge Group after identifying complexities at the Dugald River zinc/lead/silver project, in Queensland.
MMG announced this week that it would now review the planned mining method at Dugald River.
Earthworks at the project have been suspended to allow MMG to focus on the mine method review and to manage short-term capital expenditure. The termination of the EPC contract was thought to be more cost-effective than suspending the contract for a period, MMG said.
Forge said on Thursday that MMG’s decision would have a minimal impact on the company’s revenue and earnings for the full 2014, as most of the work had been scheduled for 2015.
Under the term of the EPC contract, Forge would be entitled to a termination payment consisting of the value of the proportion of the work completed and already paid for by MMG prior to the termination date.
Some 10 000 m of underground development has taken place at Dugald River and above-surface work would continue on the construction of access roads and the emergency airstrip.
The review of the Dugald River mine plan would be completed by the end of 2013 after which a final investment decision would be taken.
First concentrate shipment from Dugald River had initially been scheduled for the fourth quarter of 2015.
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