Group 6 Metals Locks $110-120M Contract to Kickstart Dolphin Underground Mining
Group 6 Metals has secured a pivotal underground mining contract with HMR Drilling Services, marking a decisive step toward sustained production at the Dolphin Tungsten Project on King Island.
- Binding $110-120 million underground mining contract signed
- Three-year initial term with option to extend by 12 months
- Fixed pricing through June 2027 with index adjustments thereafter
- HMR to employ up to 95 workers at peak operations
- Contract includes payment security and standard market terms
Contract Secures Underground Mining Phase
Group 6 Metals (ASX:G6M) has taken a major stride in advancing its Dolphin Tungsten Project by executing a binding underground mining contract with HMR Drilling Services. Valued between $110 million and $120 million, this agreement locks in underground development and production services over an initial three-year term, with an option for a 12-month extension.
The contract’s commercial terms align with standard Australian underground mining agreements, featuring fixed rates through June 2027 before transitioning to index-linked pricing. Payment security is robust, including parent company guarantees and escrow arrangements, reflecting Group 6 Metals’ disciplined approach to risk management.
Operational and Strategic Implications
HMR Drilling Services brings a solid operational and safety record to the project, with managing director Dave Hunter highlighting plans to employ up to 95 people at peak activity. This partnership is critical as Group 6 Metals transitions from surface stockpile processing to sustained underground mining, a phase expected to deliver higher-grade ore in the coming months.
Executive Chairman Kevin Pallas emphasised the contract’s role in de-risking the project’s development pathway and underpinning long-term value creation for shareholders. Preparations for underground mining are well advanced, with essential capital and consumables already ordered or onsite.
This development follows Group 6 Metals’ recent financial turnaround and operational momentum, including a surge in revenue and profit driven by tungsten price gains and increased output at Dolphin. The company’s strategy of measured, capital-disciplined progression was evident in the contract’s structure and timing, building on the groundwork laid in earlier phases of the project.
Notably, this milestone complements the company’s expanded market reach secured through a substantial tungsten supply deal with Traxys, valued at US$1.75 billion, which provides a strong commercial underpinning for future production growth.
Next Steps and Market Watchpoints
With underground mining set to commence within 60 days of contract execution, investors will be keen to monitor operational updates, production ramp-up, and capital expenditure trends. The contract’s fixed pricing and payment security mechanisms offer some insulation against market volatility, but the transition to underground operations carries execution risks that will test the company’s project management capabilities.
As Group 6 Metals advances this critical phase, the balance between operational delivery, cost control, and safety performance will be pivotal in shaping the project’s trajectory and its contribution to the company’s financial profile.
Bottom Line?
Securing a long-term underground mining contract de-risks Dolphin’s next phase but execution discipline will be key to sustaining momentum.
Questions in the middle?
- How smoothly will the transition to underground mining proceed operationally?
- What impact will fixed pricing until mid-2027 have amid tungsten market fluctuations?
- Will employment ramp-up at Dolphin meet projected peak levels to support production targets?
