Mining services company Capital Drilling has secured a five-year contract to provide a full range of mining services at Allied Gold’s Bonikro gold mine in Côte d’Ivoire.
Capital Drilling has also invested $3m in the form of a convertible loan in Allied Gold, which, when converted, will increase its stake in the latter to around 3%.
Allied Gold recently acquired the Bonikro mine, which started producing gold in 2008 and was operated by Australian mining firm Newcrest until 2017.
The mine has historically produced more than one million ounces of gold and currently has in-pit resources of 1,170 koz. Allied expects to produce about 120 koz of gold in the coming twelve months.
The contract requires Capital Drilling to provide a full range of mining services, including drill and blast, load and haul, grade control, and dewatering.
The company will also assume management control of Bonikro’s heavy mining equipment fleet, including 16 mining dump trucks, four mining shovels and other related mining equipment.
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Contract revenues over the five-year contract term are subject to confirmation of a mine plan, and it is estimated that revenue will be in the range of $25m to $30m for 2020.
Capital Drilling started a phased management oversight at the Bonikro site in July with a small team of personnel, followed by an expanded team in September. The company is working with Allied Gold’s management to refine the Bonikro mine plan.
Capital Drilling executive chairman Jamie Boyton said: “Load and haul operations are a natural extension to our existing world-class drilling and maintenance capabilities.
“It means we can now offer clients a completely integrated mining service from initial exploration drilling right through to extraction and delivery of ore to the mill.”
Boyton added the investment into Allied Gold expands the company’s revenue sources into less cyclical mine-site based activities, while Allied’s pipeline presents substantial growth opportunities.
At present, Capital Drilling owns and operates a fleet of 92 drilling rigs with perations in Botswana, Burkina Faso, Côte d’Ivoire, Egypt, Kenya, Mali, Mauritania, Nigeria and Tanzania.