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Centamin Surkari Gold Mine to transition to owner-operator mining

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Global Mining Review,

Centamin has announced that, following an independently managed contractor tender process, the underground operations at its Sukari Gold Mine will transition from contractor-mining to owner-operator mining with immediate effect. This change will deliver significant cost savings and improve operational control and mining flexibility, whilst also enabling the company to upskill the local workforce.

The decision to move to owner mining, following the expiry of the current five-year contract, has been based on the following:

  • Reserve growth: the 200% increase in Sukari underground proven and probabl reserves, as announced in December 2021, underpins an eight-year underground life of mine, with identified near-term growth targets to extend beyond a ten-year life of mine.
  • Leadership team: the operational leadership at Sukari has been significantly strengthened, with experienced underground expertise and increased investment in the development of the national workforce.
  • Operational benefits: an owner-operator model, including risk-based analysis against the submitted contractor-mining tender proposals, identified significant operating synergies for the broader Sukari operations.
  • Cost savings: the transition to owner-operator mining is expected to generate long-term cost savings of an average US$19 million/yr from 2023 onwards compared to the 2021 cost base.
  • Mine life extension and upside: 90 000 m of underground drilling is budgeted for 2022, including identified near-term growth targets to extend the underground beyond a 10-year life of mine and helping to support the underground expansion study, which is due for completion in 2H22.

Underground mining

A detailed transition plan to owner-operator mining is in place with implementation underway, including utilising a third-party underground mining specialist to assist with workforce training. The company has also executed its contractual right to purchase the current underground mining fleet from the incumbent contractor for a total capital cost of US$10.5 million to be paid this quarter, 1Q22.

Underground drilling

Following the completion of an independent tender process, the company has awarded Geodrill Limited a five-year contract to provide underground drilling services, including a minimum of 90 000 m/yr of drilling and introducing reverse circulation (RC) drilling to the underground, which is faster and enables larger samples to be taken. The contract is to commence this quarter, 1Q22.

2022 guidance

There is no change to the 2022 annual production and cost guidance. As a result of purchasing the incumbent contractor underground mining fleet, the annual capital expenditure guidance for 2022 is increased by US$10.5 million to US$225.5 million.

Martin Horgan, CEO, commented: “The decision to transition the underground to owner mining reflects extensive planning and evaluation to determine the most effective operating model as we continue to grow and maximise the value of the Sukari orebody. Following a 200% increase in underground reserves with further identified growth opportunities and an underground expansion study underway, we believe this move best places us to extract the maximum value safely, efficiently and cost-effectively from the expanding underground operations. In addition, we welcome Geodrill to Sukari and look forward to working with the team as a key partner and contractor as we continue to explore and develop the full potential of the underground operations.”

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