Sandfire makes a key decision towards the development of the Motheo project

Sandfire Resources has granted African Mining Services (AMS), the surface mining division of mining services group Perenti Global, an open-pit mining contract for the T3 pit at its Motheo copper project in Botswana.

The deal is worth an estimated $496 million and is the largest single operating contract for the new Motheo project, lasting seven years and three months with a one-year extension option.

Sandfire MD and CEO Karl Simich, said the award of the open-pit mining contract marked another key milestone towards the development of the Motheo project, which is one of the very few new copper projects of scale currently being developed anywhere in the world.

“We are looking forward to working with the AMS team to deliver the Motheo operation. As one of the largest contract mining companies in Africa, AMS has vast experience working across the African continent, and with a strong focus on safety and sustainability, they represent a perfect fit with our organisation.

“By partnering with a group with deep roots and strong community and stakeholder relationships in Africa, we have a unique opportunity to work together to create a lasting, positive legacy in Botswana and deliver significant sustainability and environment, social governance outcomes,” Simich added.

The Motheo development will generate approximately 1 000 jobs during construction and 600 full-time jobs during operations. Under the terms of the mining contract, AMS will partner with a suitable local company via a 70:30 joint venture – a structure that will generate a significant number of high-quality employment opportunities and generate long-lasting social and economic benefits for local and regional communities.

“We expect that at least 95% of the workforce employed under this contract will be citizens of Botswana, a fantastic outcome for this new flagship project. In addition, this will provide a unique opportunity to leverage AMS’ existing state-of-the-art mining training centre in Maun, providing the local workforce with access to world-leading mining techniques and technology,” said Simich.

Full-scale construction of the $279-million mine development is expected to start immediately upon receipt of the mining licence, which is expected over the coming weeks, with mining scheduled to start in early 2022 ahead of first production in early 2023.

The Motheo mine has an initial mine life of 12.5 years based on production from the T3 pit.

The base case 3.2-million-tonne-a-year project development was projected to generate $664-million in pre-tax free-cash-flow and $987-million in earnings before interest, taxes, depreciation and amortisation at a forecast all-in sustaining cost of $1.76/lb over its first 10 years of operations.

Perenti MD and CEO Mark Norwell said that the Motheo contract represented a game-changing growth opportunity for AMS and would substantially increase Perenti’s presence in Botswana.

“Partnering with Sandfire is a great opportunity and collectively we share a strong commitment to the creation of shareholder value while demonstrating the highest standards of safety, responsibility and sustainability.

“Growing our footprint in Botswana is aligned with our 2025 strategy, to further expand into stable mining jurisdictions and pursue quality projects. The benefit of adding Motheo to the Perenti project portfolio is the opportunity to leverage our existing in-region operational presence at Zones 5 as well as partnering with Sandfire to develop Botswana’s next large-scale, highly productive, world-class copper mine.”