Mining firm Gindalbie Metals Ltd announced on Wednesday that a $120 million contract to construct a power transmission line on its $2 billion Karara iron ore exploration site in Western Australia has been awarded to resource contract specialist Downer EDI Ltd (ASX: DOW).

The contract calls for Downer EDI to construct a 180-kilometre, with 330kV capacity transmission line from the Karara project to Eneabba, which will then link up to Western Power's South West Interconnected Service (SWIS).

Gindalbie said that the SWIS power network, which covers the areas of Albany, Kalbarri and Kalgoorlie, would allow the company to draw the needed power from Verve Energy for its Karara project. The company said that it has an existing 15-year supply deal with the state power producer.

Company managing director Garret Dixon said that construction activity by Downer EDI on the transmission line has already started as he added that the contract would ensure that Gindalbie would enjoy adequate power capacity that could support the Karara project's anticipated output of more than 30 million tonnes each year, which he said should have a lifetime of more than 30 years.

On his part, Downer EDI chief executive Grant Fenn expressed confidence that the company would be able to fully meet the requirements of the contract citing that "Downer has been a long-term provider to the power and transmission sector, having constructed transmission lines in all regions of Australia."

The Karara project in Western Australia is a joint development being undertaken by Gindalbie with Chinese firm Angang Steel Company Ltd (AnSteel) and is now being regarded as the most advance mining project in the state's midwest region.

As of 1123 AEST on Wednesday, both Gindalbie and Downer EDI shares were trading up with the Gindalbie stocks easing a bit at 90.5 cents while Downer's gained two cents at $4.82.