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Harmony Gold, Newcrest to spend $2.3bn on Golpu feasibility

Graham Briggs

Graham Briggs

Photo by Duane Daws

15th December 2014

By: Martin Creamer

Creamer Media Editor

  

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JOHANNESBURG (miningweekly.com) – Gold mining companies Harmony Gold of South Africa and Newcrest Mining of Australia plan to spend $2.3-billion on developing their Golpu deposit in Papua New Guinea.

Harmony and Newcrest, which each own 50% of the Golpu project through the Wafi-Golpu Joint Venture, on Monday gave a firm thumbs up for the Golpu project to proceed to feasibility study level and have least two stages.

The government of Papua New Guinea has retained the right to acquire up to a 30% interest in the project at any time up to the date of granting the mining lease, at a price equal to the sunk costs at the date of acquisition.

The first stage of the project targets first production in 2020 from an orebody, which is said to contain 20-million ounces of gold and 9.4-million tons of copper.

“The Golpu project is a significant value accretive game-changer for us,” Harmony CEO Graham Briggs said in a media release to Mining Weekly Online.

The updated Stage 1 prefeasibility study has recommended the use of the block cave mining method and a decision is expected before July on the sinking of twin decline shafts.

The two block caves will access 30% of the tonnage, which contains 40% of the Golpu reserve’s gold and copper.

The plan is for the mining and processing infrastructure to then be used to exploit the remaining 70% of the tons, which contain 60% of the gold and copper.

Attributable production for Harmony is calculated at 500 000 oz of gold equivalent a year from 2024 to 2029.

A just-completed updated prefeasibility study has identified an improved business case for the project by splitting it into two stages, with Stage 1 targeting the higher-value Golpu deposit.

“This study supports our view that Golpu is a spectacular orebody,” Briggs commented.

Briggs said that Harmony would fund the early stages of the project from internal cash flows.

“In the current environment of volatile gold prices, we are focused more than ever on cost control and cash generation at existing operations,” Briggs emphasised.

The updated prefeasibility study has recommended the development of twin exploration declines to establish further geotechnical and geological data.

The updated prefeasibility study has reduced project capital, lowered operating costs and improved the rate of return, which aligns with the Harmony’s low-cost obsession.

The project’s internal rate of return is 17%.

“By targeting the high value core of the ore body first, we have increased the economic returns from the mine by being cash flow positive earlier in the life of the mine, as well as funding the infrastructure that will support stages of ore extraction and processing,” Newcrest MD and CEO Sandeep Biswas told Mining Weekly Online’s Perth office.

Stage 1 will involve the extraction of 146-million tons of material with an average grade of 1.02g/t gold and 1.60% copper.

The proposed start-up production rate for the first block cave will be three-million tons a year at 425 m depth over five years and the production rate for the second block cave six-million tons a year at 1 050 m depth over 23 years.

The plan is for an incline conveyor in one of two declines to feed a process plant at the portal and the other decline to provide ventilation.

Yearly production from the 27-year life-of-mine Stage 1 will peak in 2025 at 320 000 oz of gold and 150 000 tons of copper.

The feasibility study just approved will iron out the technical issues identified in the prefeasibility study and complete studies for roads and tailings storage.

The Stage 1 feasibility and the updated Stage 2 prefeasibility will be completed by the end of 2015.

The Golpu project team, with WorleyParsons as project consultant, has incorporated a total of 52 000 new drill core samples into the updated study.

Edited by Creamer Media Reporter

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