GR Engineering goes from Cosmic to Cosmos with nickel miner

Top image :
Western Areas managing director Dan Lougher (left).
New contract continues expansionary period for engineering firm.

Leading Australian sulphide nickel producer Western Areas has engaged engineering contractor GR Engineering Services to complete a A$48 million (US$36m) upgrade of its Cosmos concentrator, confirming continuation of a third long-term supplier partnership at its operations in Western Australia.

Barminco, part of Perenti Global, extended its connection with Western Areas to at least 20 years when it won a A$200m, five-year contract at the new 900,000 tonnes per annum Odysseus mine at Cosmos, 30km north of Leinster, last September. Barminco has been the underground mining contractor at Western Areas’ mainstay Flying Fox and Spotted Quoll sites at Forrestania, south of Southern Cross, from their inception.

RUC Cementation Mining has also just furthered its 15-year link to Western Areas, picking up shaft design and construction work at Cosmos.

GR Engineering, which upgraded the Cosmos concentrator to 460,000tpa from 240,000tpa for previous owner Glencore more than 10 years ago, has started the engineering, procurement and construction (EPC) work for Western Areas.

GR Engineering completed a A$25m upgrade of Western Areas’ Cosmic Boy nickel concentrator at Forrestania in 2010.

The A$1 billion-market-cap nickel producer is targeting annual output of about 14,500 tonnes of nickel in concentrate from FY24 at Cosmos. Its October 2018 definitive feasibility study, based on a long-term US$7/lb nickel price and average all-in sustaining costs of US$2.63/lb, outlined a plan for an underground mine with 1.27 million tonnes per annum (c900,000tpa ore) shaft haulage capacity to feed the upgraded Cosmos plant. Pre‐production capital expenditure was pegged at A$299m.

Western Areas managing director Dan Lougher said the 630m-deep, A$63m haulage shaft, justified on the basis of an initial 10-year operating life and proposed throughput rates, would slash underground ore transportation costs, versus decline haulage to surface, and reduce mine development capex.

He said electrical power with a renewable component would make shaft haulage a major contributor to the predicted 85% reduction in Cosmos’ CO2 emissions, versus full diesel truck haulage, eliminating about 1.5 million litres a year of diesel use. It would also remove 5MW of heat generated from diesel engines underground, eradicating about 200 cubic metres per second of additional ventilation requirement.

The shaft is expected to be commissioned in the June quarter of calendar 2023.

Western Areas bought Cosmos from Glencore for A$24.5 million in October 2015. Only eight years earlier the asset was the major target of Xstrata’s $3.1 billion takeover of Jubilee Mines.

Western Areas raised A$100m of equity funding earlier this year to underwrite the Cosmos underground mine development and plant refurbishment projects.

GR Engineering (ASX: GNG) has a current market value of about A$290m, with its shares trading about 47% higher than at the start of 2021.

The company reported record revenue of A$392.4m for FY21, and EBITDA of $37.2m. It doubled its fully franked annual dividend to 12c/share, compared with the previous year, with a 7c/sh final payout.

It is forecasting FY22 revenue will come in at $440-460m.


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