Artemis awards $236M EPC contract for Blackwater plant in BC

Aerial view of Blackwater. Credit: New Gold

Developer Artemis Gold (TSXV: ARTG) has awarded a $236-million guaranteed maximum price (GMP), fixed price contract to Ausenco Engineering for a 5.5 million-tonne-a-year processing plant and related infrastructure at its Blackwater gold project in central B.C.

The press release highlights that the $236-million engineering, procurement and construction (EPC) contract is in line with the overall $592 million capital cost estimate outlined in the 2020 Blackwater pre-feasibility. The plant and associated infrastructure are expected to be the largest component of this capital outlay, representing approximately 40% of the estimate from the August study.

The two companies have signed a binding memorandum of understanding (MOU) that outlines the terms under which Ausenco will complete detailed engineering, which will form the basis for a final EPC price that “will not exceed the GMP.”

“The Ausenco GMP bid serves as further validation of  the initial capital costs estimated in the 2020 PFS with respect to the process plant and associated facilities, further de-risking the development of the project,” Steven Dean, Artemis chair and CEO, said in a release. “The award of the GMP should give investors and potential project debt lenders greater confidence in the proposed schedule and initial capital cost to develop Blackwater on time and on budget.”

Artemis is aiming to shelter approximately 60% of the Blackwater development capital from capital cost and schedule deviations by also aiming to execute final EPC fixed price contracts for the site facilities and power transmission line, among others. Ausenco has completed detailed engineering and will be working towards a final fixed price EPC contract for the facilities.

A bidding process is underway for a GMP proposal for the construction of a transmission line and offsite infrastructure – the contract is expected to be awarded in the second quarter.

The Blackwater PFS defined a staged, 23-year open pit development. The initial five-year phase would run at a throughput rate of 5 mtpa before increasing to 12 mtpa for the following five years and then ramping up to 20 mtpa for the rest of the mine life.  

In the first stage, Blackwater would generate an average of 248,000 gold oz. a year, at all-in sustaining costs of $668 per oz., increasing to 420,000 oz. annually at all-in costs of $696 per oz. for the following five years, and then generate 316,000 oz. annually at AISCs of $911 per oz. over its remaining life.

In addition to the $592 million initial capital cost estimate, expansion capital outlays are pegged at $426 million and $398 million for the second and third phases, respectively.

Artemis is aiming to complete the project permitting by the first quarter of next year for a construction start in the second quarter of 2022.

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