Sedgman Extends McArthur River Zinc/Lead Mine Operating Contract

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Researched by Industrial Info Resources (Perth, Australia)--Sedgman Limited (ASX:SDM) received an extended service contract for the McArthur River mine in March 2013. The contract is for the operations and maintenance of Xstrata PLC's (ASX:XTA) McArthur River zinc and lead mine crushing circuit.

The mine is about 45 kilometres southeast of the remote Northern Territory town of Borroloola, and it is considered one of the world's largest bulk producers of zinc in concentrate form. The contract is valued at $12 million per year and has the option of a further extension by 2014. Under the contract, Sedgman will operate and maintain the mine's primary, secondary and tertiary crushing plants and mobile equipment; it also will be responsible for supplying stockpiled run-of-mine ore to the plant.

The McArthur River mine is undergoing an expansion to increase the processing capacity from the current 2.5 million tons per year (T/yr) to an estimated 5.5 million T/yr. The expansion will see increased total zinc production to 380,000 T/yr and lead production to 93,000 T/yr. The expansion will be achieved by using selected surplus equipment from Xstrata Zinc's Mt. Isa operations in Queensland, and new equipment, as required. Upon completion, the McArthur River operations will be able to produce a separate zinc-concentrate acceptable to all smelters from its bulk zinc-lead concentrate. The $360 million expansion project kicked off in December 2012, and it includes an accommodation camp for 300 workers in the operating staff of the mine. The project is being handled by Milestone Engineers and Project Managers (Perth), providing engineering, procurement and construction (EPC) services. Completion is targeted for early 2014.

The McArthur River mine was acquired by Xstrata in 2003 as part of the company's Mt. Isa Mines acquisition and was considered to be an uneconomic asset with an estimated mine-life of less than five years. However, through a series of development and expansion efforts, Xstrata has converted McArthur River into an efficient operation with a total mine-life of an addtional 15 years. Sedgman has been operating this three-stage crushing and screening facility for the past 10 years and the completed expansion, with an additional mine-life, will provide the company with more opportunities in future.

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