JOHANNESBURG (miningweekly.com) – A memorandum of understanding (MoU) with the Papua New Guinea government has moved South Africa’s Harmony Gold to what is described as a significant step closer to securing the special mining lease for its copper/gold project in the independent south-western Pacific region.

The position has been secured following Harmony’s wholly-owned subsidiary, Wafi Mining Limited and its Newcrest partner, signing the MoU at a ceremony attended by the Governor General, Prime Minister and the Governor of the Morobe province.

The MoU is described in a media release to Mining Weekly as an affirmation of the parties’ intent to proceed with the long-awaited Wafi-Golpu project, subject to the finalisation of the permitting process and approvals by both the Harmony and Newcrest boards.

It sets out terms to be included in the mining development contract, which is a prerequisite for the grant of a special mining lease, which includes equity participation by the State and its nominees, landowners and the Morobe provincial government.

Other terms embrace royalty rate and taxation, provision for fiscal and regulatory stability to underpin the long-term investment required to develop and operate the project, and social contributions to be made by the project towards business development, infrastructure development and other social development projects that will deliver long-term benefits to local communities.

The framework for the parties to progress the permitting of the project as quickly as practicable is also outlined in the MoU, which recognises that the development of the project will be of major economic significance to the people of Papua New Guinea.

It encourages development in a way that contributes to the advancement of social and economic welfare, while also providing a foundation for long-term mining development. 

Harmony CEO Peter Steenkamp described the principles agreed upon as providing a basis for the equitable distribution of benefits to landowners, communities, the Morobe provincial government and Papua New Guinea while at the same time supporting meaningful returns for the developers and providers of capital.

Once the special mining lease is granted, the 2018 feasibility study update will be completed and board approval sought for the requisite financial investment decision to develop the project, which is located 65 km southwest of Lae, in the Morobe province.

The proposed mine site is 200 m above sea level in moderately hilly terrain, 30 km upstream from the confluence of the Watut and Markham rivers.

In December 2020, the Conservation and Environment Protection Agency concluded its assessment of the project’s environmental permit application and granted an environment permit approving deep-sea tailings placement as the project’s tailings management method.

Harmony and Newcrest each own 50% of the project and Papua New Guinea has the right to purchase up to 30% equitable interest in any mineral discovery at Wafi-Golpu, exercisable at any time before the commencement of mining. If the State chooses to exercise its right of purchase, it will be required to contribute to the costs of the development.