Under a $A17 million contract, Watpac will deliver surface mining works for the project including clear and grub, topsoil removal, load and haul, drill and blast, and dewatering operations.

The 12-month contract will be carried out at the project’s Mossbecker and Yellow Aster pits and Watpac will provide open pit mining services using conventional excavator and dump truck mining methods.

Ramelius expects mining to start by July 1, with first ore to be trucked to the Checker Mill at Mt Magnet late in the September quarter.

Ramelius CEO Mark Zeptner said it was pleasing to see the project get underway as planned.

“In the current environment, it is pleasing to be able to kick off a new project with the associated employment and royalty benefits for the state, as well as the strong early cashflows that a high grade, low cost gold project like Kathleen Valley will deliver,” he said.

“Our selected open pit contractor, Watpac, has commenced mobilisation to site and we are now finalising other related contracts and agreements.”

The Kathleen Valley gold project is located 50km north of Leinster.

It comprises a mineral resource of 163,000 ounces and an ore reserve of 56,000 ounces at a grade of 4.1 grams per tonne gold.

Ramelius expects to recover 95% of the ore and estimates the project will have a mine life of 1.5 years.

The project has up front capital costs of $A1.5 million and C1 cash costs of $925/oz, with all-in sustaining costs estimated at $936/oz.

Zeptner said Ramelius would now focus on finalising arrangements for the nearby Vivien gold project to allow for formal underground mining to commence in the near future.

Vivien has 184,000oz of underground resources and a mine life of three years.

Ramelius is hoping Kathleen Valley and Vivien will go into production at the same time to further boost the company’s recent successes at the established Mt Magnet mine.

Shares in Ramelius were unchanged at 13c, while Watpac rose 3% to 81c.