APA Group wins $140m pipeline deal

AngloGold Ashanti Australia has signed a $140 million agreement with natural gas infrastructure company APA Group for the transportation of natural gas to the Sunrise Dam and Tropicana gold mines in Western Australia.

Located 330 kilometres east of Kalgoorlie, the Tropicana mine is 70 per cent owned by AGAA and 30 per cent owned by Perth-based gold explorer Independence Group.

Under the agreement, APA said it would construct a new 292km pipeline that will connect Tropicana to APA’s Goldfields gas pipeline and Murrin Murrin lateral.

Engineering, design and procurement work has commenced, with completion expected prior to January 2016 when gas transportation services are due to commence. 

“While the pipeline’s construction is underpinned by long-term gas transportation agreements with AGAA, the Eastern Goldfields gas pipeline can be further expanded to service other mines in the region in addition to these initial contracts,” APA managing director Mick McCormack said.

Meanwhile, the existing diesel-powered generators at Tropicana will be replaced with gas-fired generators to reduce power costs by 12-15 per cent, which would result in a reduction of cash costs by $25-$30 per ounce of gold.

“The pipeline and gas transportation agreement will provide continuity of fuel supply, reduce exposure to diesel price volatility and significantly reduce the number of trucks on the road, which has an important safety benefit as well as reducing road maintenance costs,” AGAA senior vice-president Michael Erickson said.

“Natural gas is a cleaner fuel than diesel and its use will reduce greenhouse gas emissions.”

APA Group’s share price rose by 0.56 per cent to $7.12 at 1:45pm.