Name of the Project
Frieda River copper/gold project.

Location
The gold project is located 175 km north-west of the Porgera gold mine and 75 km north-east of the Ok Tedi mine, in Papua New Guinea. 

Client
Frieda River is held by the Frieda River Joint Venture (JV), an unincorporated JV between Frieda River Limited; PanAust, a former listed Australian miner and now a unit of China's Guangdong Rising Assets Management (GRAM); and Highlands Frieda, a subsidiary company of Highlands Pacific. Frieda River manages the project and holds an 80% interest; Highlands holds the remaining 20% interest.

Project Description
Frieda River is one of the largest undeveloped copper/gold deposits in the world.

An addendum to the May 2016 Frieda River feasibility study (FS) was completed on the project in March 2017.

The addendum incorporates new data and information that was generated by PanAust/GRAM, subsequent to the completion of the initial study, and addresses some of the issues raised in an independent peer review conducted by engineering consultants Behre Dolbear Australia in January 2017. 

The addendum includes data from additional resource and geotechnical drilling at the project, which has led to increases in mineral resources and reserves, an amended openpit design and a consequent updated mine plan and production schedule. 

Mineral resources and reserves at the project, which comprises the Horse-Ivaal-Trukai, Ekwai and Koki mineral resources, have decreased from 2.74-billion to 2.64-billion. Reserves have increased from 608-million tonnes to 686-million tonnes.

Copper-in-concentrate production increased from 190 000 t/y in the May 2016 FS to 200 000 t/y in the January 2017 addendum to the FS. Gold-in-concentrate production has also increased from 260 000 oz/y to 280 000 oz/y.

The initial estimated mine life has increased from 17 years to 18 years, with mill feed increasing from 700-million tonnes to 715-million tonnes.

Jobs To Be Created
Not stated.

Net Present Value/Internal Rate of Return
Compared with the May 2016 FS, the FS addendum has increased the project’s post-tax net present value (NPV), at a real discount rate of 7.8% from $820-million to $1.13-billion. The NPV has been calculated to a start date of June 30, 2018, not the current date.

The internal rate of return has increased from 10.8% to 11.4%. The post-production payback period has remained the same, at six years.

Value
Compared with the May 2016 FS, preproduction capital costs have decreased from $3.61-billion to $3.6-billion.

Duration
The project is expected to take four years to construct.

Latest Developments
Highlands Pacific and its JV partner at the Frieda River copper/gold project have started arbitration proceedings to resolve a funding dispute.

The dispute pertains to the partners’ respective obligations under the JV agreement, including whether Highlands is obligated to start funding of project expenditures.

Highlands has previously sought to resolve the dispute through mediation; however, the parties have now agreed to seek a final and binding arbitration before a sole arbitrator, with a final hearing yet to be fixed.

Highlands previously raised doubts about the standard of the Frieda River feasibility study, saying that it did not meet the standards required by the JV agreement, and was therefore incomplete.

JV partner PanAust undertook additional work on the feasibility study, which resulted in an addendum being released.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
PanAust, tel +61 7 3117 2000, fax +61 7 3846 4899 or email info@panaust.com.au.
Highlands Pacific, tel +675 323 5966, fax +675 323 5990 or email info@highlandspacific.com.