Highfield Resources Ltd (ASX:HFR) has signed a contract for construction of the declines and underground mining infrastructure at the Muga-Vipasca Potash Project in Spain.
This contract has been awarded to the joint venture (JV) formed by mining specialist contractors EPOS-Empresa Portuguesa de Obras Subterráneas S.A. of Portugal and TUNELAN-Obras Subterráneas S.A. of Spain (EPOS-TUNELAN).
The value of the decline contract is €48 million and is aligned to the estimated construction cost of the declines included in the Updated Muga Feasibility Study of November 7, 2023.
This amount represents 11% of the phase 1 capex of €449 million and just under a third of the total planned contract construction budget.
“Another major milestone”
Highfield CEO Ignacio Salazar said: “With progress being made on the remaining funding, we are signing the contract for the construction of the two declines and underground mining infrastructure.
"Our team has delivered another major milestone that is key to allow us to start the construction of the main facilities at Muga.”
Works are expected to begin during the current half upon completion of funding and a Final Investment Decision (FID).
Map showing location of the declines and infrastructure.
Contracting strategy
The contracting strategy for the Muga-Vipasca Project will employ an owner-managed project delivery model that envisages the construction of the declines and the underground mining infrastructure to be undertaken by a specialist mining contractor and the civil works by a general contractor.
Following a rigorous tender process, Highfield signed the contract for the construction of the declines and underground mining infrastructure with the EPOS-TUNELAN JV after both companies submitted a joint offer.
Highfield said the combination would take advantage of the synergies created by EPOS’ extensive experience in multiple mining and underground construction projects in different projects in Europe and the Americas along with TUNELAN’s local knowledge of Spanish construction regulations and its extensive practical working experience with equipment similar to that which will be used in Muga, including roadheaders.
An FID needs to be reached by Highfield and funding completed as a condition precedent to initiate any payment under this contract.
The duration of the construction agreed with EPOS-TUNELAN covers 26 months and is consistent with the overall schedule of the project.
Highfield and EPOS-TUNELAN will work together in recruiting the construction teams, paying particular focus on hiring local personnel.
Underground infrastructure.
"We are working hard to finalise the Civil Works and Urbanization contract. And with that, we are well prepared to start construction and build Muga to deliver a new and robust source of a critical fertilizer located strategically in the middle of the western European market,” Salazar added.
Scope of contract
- The scope of the declines and underground mining infrastructure contract covers:
- The construction of two parallel declines, each 2.6-kilometres long, with a cross-section of 32 square metres and a 15% slope to access the mineralisation at a depth of 350 metres. These will be excavated using trackless mobile equipment, including three roadheaders and one conventional excavator in combination with a boom jumbo and two bolters.
- The construction of crosscuts that connect the parallel declines and a bypass gallery for the mine’s main fans.
- The construction of the declines’ pumping stations to collect and pump out any water that could infiltrate into the declines.
- The construction of the surface facilities to treat the fresh and saline water collected in the declines during construction.
- The construction of the underground mining infrastructure which include 2 kilometres of underground drifts within the potash deposit to access the production panels, and where the principal conveyor belts will be located.
- The ore transfer room, where ore is transferred via conveyor belts from the various mining areas to the main decline conveyor belt, hauling the ore directly to the process plant.
- The electrical room, from where the electrical network will be connected to the mine.
- The backfill transfer room, where the backfilling material is distributed to the different conveyor belts and transported to the different mining areas.
- Other facilities such as the water tank room, from where the brine water network will be distributed to the mine.
Technical support
The design and engineering of the declines and underground infrastructure was developed by international engineering company Systra-Subterra, which specialises in underground projects.
Systra-Subterra will provide technical support and supervision during the construction of the declines and underground infrastructure at Muga.
Highfield and EPOS-TUNELAN will work together in recruiting the construction teams, paying particular focus on hiring local personnel.
The partners are also negotiating the purchase of equipment which is suitable not only for the declines’ construction but for mining as well, especially roadheaders, trucks, loader and bolters, among others.
MAIN IMAGE: Photo showing mine gate.