PERTH (miningweekly.com) – Mining services provider Perenti on Monday confirmed that Ghana Manganese Company had terminated its equipment hire contract with Perenti subsidiary African Mining Services (AMS) at the Nsuta manganese mine.

Perenti said that the termination of the contract followed the temporary suspension of services earlier this month, driven by the customer’s commercial position.

Perenti on Monday said that the termination was not due to AMS’s performance, but due to the Ghanaian government directing the miner to cap its production at the mine.

The equipment deployed at Nsuta will be used at existing projects, held for deployment to existing and new projects in the future, or sold to third parties to generate cash inflows.

Perenti has warned that with the cancelling of the equipment contract, in conjunction with the company’s earlier decision to halt operations at the Boungou gold mine and the Bissa gold mine, in Burkina Faso, underlying net profit after tax would be reduced from the previous guidance of A$140-million to between A$115-million and A$120-million for the 2020 financial year.

“The termination at Nsuta and its earnings impact is disappointing. However, it is an isolated incident driven by circumstances specific to Ghana Manganese Company. I stress that the termination in no way reflects AMS’ performance at the project, and the termination notice specifically thanked AMS for its ‘outstanding service’,” said Perenti MD Mark Norwell.

He said that the termination freed up capital that AMS could now use to service new contract wins and extensions announced earlier this month.

“Although our surface mining business in Africa is facing some challenges, the balance of the business continues to perform well and provides a strong base from which to execute our strategy. We are continuing to focus on the transformation of AMS as we have previously communicated to the market.”