Underground mining contractor Pybar Mining Services has signed a letter of intent to provide services at WPG Resources’ Challenger gold mine in South Australia.

The mine is located 730km northwest of Adelaide, 150km southwest of Coober Pedy and 130km northwest of WPG’s Tarcoola gold project.

The Challenger joint venture (JV) proposes to begin stockpiles processing at the mine in May 2016. Underground mining activities are set to recommence during the month end.

Under the agreement, Pybar will provide mining services, including securing plant and equipment, key personnel as well as mobilisation.

"WPG looks forward to continuing its good relationship with Pybar and restarting operations at Challenger with the first gold anticipated prior to 30 June 2016."

The JV and Pybar will continue to work together to finalise the mining contract.

WPG Resources managing director Martin Jacobsen said: "WPG looks forward to continuing its good relationship with Pybar and restarting operations at Challenger with the first gold anticipated prior to 30 June 2016."

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By GlobalData

Challenger Gold Operations (CGO) was acquired by WPG from Kingsgate Consolidated in March 2016.

The mine will be operated under a 50/50 JV with Diversified Minerals, an associated company of the Pybar group of companies.

Challenger has been in operation since April 2002 and produced 1.1 million ounces of gold till date.

CGO was a gold discovery made by a JV between Resolute Resources and Dominion Gold Operations in 1995.

Underground development at the mine commenced in February 2004 and full-scale underground production began during mid-2005.