Australia-based gold mining company St Barbara has selected Macmahon Holdings as the underground mining contractor at the Gwalia underground gold mine in Western Australia.

The contract has an initial term of five years. It also has a provision, under which St Barbara could choose to extend the contract for an additional three years.

Under the contract, Macmahon will provide a whole of mine service including mine development, ground support, production drilling and blasting, loading and trucking, shotcreting and paste fill reticulation.

Macmahon expects the contract to generate revenue of around A$500m ($389.3m) over the initial five-year term and would require capital expenditure of about A$40m ($31.14) during the financial years 2021 and 2022.

Located 3km south of the town of Leonora, the Gwalia mine has already produced four million ounces from open cut and underground operations.

Macmahon plans to start early works on site in April 2021 followed by full mobilisation in May 2021.

Macmahon managing director and CEO Michael Finnegan said: “We will work very closely with our new client to ensure continuity of operations during the transition period.

“This new project will make an important contribution to our strategic objective to diversify and expand our underground business.”

Additionally, the new contract terms and change in underground operator, were an important aspect of St Barbara’s Building Brilliance company transformation, the firm noted.

The new contract terms are anticipated to improve the underground mining performance and productivity, while reducing operating costs. The headcount will remain unchanged, added St Barbara.

Last month, Macmahon won a contract from Silver Lake Resources to carry out mining works at the Deflector Gold Copper Mine in Western Australia.

Slated to run until April 2025, the new mining services contract involves underground development, ground support and production activities including the provision of all labour and mobile mining equipment.