Sedgman Wins $90 Million Contract for La Mancha's Gold Processing Plant

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Researched by Industrial Info Resources (Perth, Australia)--Sedgman Australia (ASX:SDM) has secured a contract for an estimated $90 million to construct a new gold processing plant facility for La Mancha Resources (TSX:LMA), under which it will provide engineering, procurement and construction (EPC) services. The processing facility, called the Mungari plant, will be located about 22 kilometres west of the mining town of Kalgoorlie and will use ore from two operational mine sites, Frog's Leg and White Foil.

The Frog's Leg mine site is fully owned by La Mancha. The mine has been subject to an expanded exploration and underground development, which has increased its mine life by another five years. The White Foil mine also will undergo an expansion, which would include construction of a much larger open pit.

Construction on the planned 1.5 million-ton-per-year, carbon-in-leach processing facility is due to kick off in April 2014 and will require about 12 months to complete. Currently, La Mancha has a toll treatment agreement with Alacer Gold to process its ore through Alacer's Jubilee processing facility, located in South Kalgoorlie. The toll treatment contract was valued at $25 million and is scheduled to end in June 2014. The decision to build the own processing plant was taken on the basis of the expansion of La Mancha's expanded resources and sustained gold prices. With the new processing facility being functional by mid-2014 and expansion activities planned for its two open-pit mines, the company expects to increase its total gold production to an estimated 180,000 ounces by 2016.

The EPC contract was awarded following the completion of the definitive feasibility study and the front-end engineering design phases by Sedgman in 2012. "Sedgman has worked closely with La Mancha to successfully deliver early-phase solutions, and the contract demonstrates our commitment to building a stronger service offering targeting metals," said Nick Jukes, Sedgman's chief executive officer.

Nathan Proposch, a project manager for Sedgman, confirmed that the company is in the process of finalizing subcontractors' packages and that construction should be under way by April 2013.

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