Silver Lake said in a statement this morning that project contractor Pacer Corporation had expanded the budget necessary to bring Murchison into production and protracted the multi-mine hub’s completion schedule without explanation.

In response, Silver Lake resolved to only partially pay Pacer’s invoice pending a satisfactory response from the contractor.

“We understand from Pacer that an explanation will be provided,” the company said.

“However, Silver Lake does not consider it has any liability to Pacer regarding invoiced amounts that exceed the amounts payable under the contract.

“Silver Lake will pursue all contractual, legal and statutory avenues available to it to protect its interests in respect of this matter.”

Perth-based mining services company Resource Development Group completed full acquisition of Pacer in March last year, but was not available for comment at time of publication.

According to Silver Lake, Pacer’s most recent budget revision forecast a need for $A92 million to complete works at Murchison, compared to the initial completion budget of $65-70 million.

Silver Lake said a small construction team remained on site to progress ongoing construction and commissioning activities, which were expected to be completed within six weeks.

The operation has completed commissioning of several major mill components including a 10.2 megawatt power plant, crushing and grinding circuits, and a tailings storage facility.

Murchison holds a resource of 20.5 million tonnes at 2.9 grams per tonne gold for 1.9 million ounces of gold.

The base case production plan has ore being sourced from 14 open pits and four undergrounds at various stages over an eight to 10-year mine life, feeding a central processing facility.

Ore is currently being sourced from three open pits and the site’s mill is now being operated by Silver Lake at 93% capacity.

Shares in Silver Lake were trading down 9.4% at $1.77.