Dacian hires APA, Zenith for Mt Morgans

Dacian Gold has lined up Zenith Energy to build, own and operate a gas-fired power station at its Mt Morgans gold project near Laverton, and signed a $57 million, 10-year contract with gas pipeline operator APA Group.

Perth-based Dacian said today it had entered into a letter of intent with Zenith for the construction, ownership and operation of a 17-megawatt gas-fired power station, which would power the gold operation expected to begin producing by March next year.

The capital and operating costs for the power station and ongoing supply of electricity will be paid to Zenith through an operating tariff over an eight-year period.

Dacian has also locked in a gas transportation agreement with APA for the construction of a four-kilometre pipeline from APA’s Eastern Goldfields pipeline to Mt Morgans.

The gas transportation agreement has a 10-year term, with Dacian contributing $4.5 million to the cost of the infrastructure plus about $57 million to use the infrastructure over the tenure.

A gas supply agreement is expected to be signed with a provider in the coming months.

The power station is expected to be commissioned early in the first quarter of 2018, ahead of first gas transportation and commissioning of Mt Morgans.

“We are very pleased to have been selected by Dacian and look forward to working with the Dacian team to deliver a world-class power supply solution to Mt Morgans for many years to come,” Zenith managing director Hamish Moffat said.

“The new capacity on the Mt Morgans project, together with several recent project expansions for existing customers, has seen Zenith’s contracted building, ownership and operation capacity exceed 110MW.”

APA managing director Mick McCormack said it was satisfying to connect a new customer to the company’s interconnected infrastructure in WA.

“Gas will travel approximately 1,200km across four APA pipelines – the Goldfields Gas Pipeline, the Murrin Murrin Lateral, the Eastern Goldfields Pipeline and the new lateral,” he said.

Dacian shares were 2.8 per cent higher to $2.19 each at 1:30pm, while Zenith shares were 1 per cent higher to 50 cents each.