The announcement led to a fall of more than 7 per cent in the Genex share price this morning, but recovered some of that ground to be down 2 per cent by midday.

The project was still expected to be delivered on time in the second half of 2024, but the flooding has been a major problem for the project and was caused by an unexpected geological feature it hit during the drilling of the main access tunnel.

It had also previously said it didn’t expect costs to increase, but since then it and its contractors have discovered a “significant zone of high quality but fractured rock in front of the main access tunnel which is charged with high pressure water”.

“While it is technically feasible to continue to progress the main access tunnel through this zone, Genex and (the contractors) have assessed this would have a significant impact on tunnelling productivity and therefore the overall cost of the project,” the company said.

It said the most efficient way to progress was to go around the structure and it was now working on a final design of the re-aligned tunnel which should allow it to restart work within weeks.

It expected this would cause a “modest delay” but it still expected to be on schedule.

“However, it is now expected that the additional cost of the MAT realignment will result in Genex further utilising the remaining project contingency and, as a result, based on information available to Genex at the time of this announcement, the total cost of the project is estimated to exceed the financial close budget by $10 million to $15 million,” the company said.

“Genex currently has adequate cash resources available to it to top-up the project contingency commensurate with this estimated additional cost.”