Byrnecut nabs $200m Sandfire contract

UPDATE 2.30pm: Byrnecut has won a $200 million underground mining contract for Sandfire Resources' DeGrussa copper/gold mine near Meekatharra.

Sandfire awarded the contract to Byrnecut after a competitive tendering process and ahead of the expiry of its existing contract with Australian Contract Mining.

The new three-year contract has two year extension options.

It is the single largest operational contract at DeGrussa, employing about 150 people and utilising some 30 items of underground mining equipment and associated surface support.

Sandfire estimated the new contract would reduce gross mining costs at DeGrussa by more than 10 per cent.

"This anticipated reduction in mining costs is consistent with ongoing efforts by Sandfire's management to reduce costs, improve efficiencies and streamline all aspects of the DeGrussa operation," the company said in a statement.

"It also reflects the lower contract rates currently being experienced across the Australian resources sector."

Sandfire's chief operating officer Michael Spreadborough said the company had established an implementation team to work closely with Byrnecut and ACM to assist in managing a seamless and efficient transition with limited disruption to mining operations and production.

Byrnecut already has underground mining contracts at Newcrest's Telfer gold mine, St Barbara's Gwalia gold mine and the Jundee gold mine, which will soon be taken over by Northern Star Resources.

The Perth Airport-based business also has contracts in South Australia and Africa.

Sandfire shares closed down 12 cents, or 1.97 per cent, at $5.96.