The Wafi-Golpu gold-copper project in Papua New Guinea’s Morobe Province is a bright spot in an otherwise tight mining environment. The Morobe Mining Joint Venture partners believe it will be one of the world’s lowest cost gold projects, and expect production to begin in 2020.
Morobe Mining Joint Venture (MMJV) has estimated that the first stage of the Wafi-Golpu gold-copper project in Morobe Province of PNG will cost US$2.3 billion (K5.9 billion) to develop, less than half of the original forecast it made during 2012.
In an updated version of the original Wafi-Golpu pre-feasibility study, MMJV achieved an aim to lower the forecasted capital costs to develop stage one, or the Golpu deposit, with the new estimate, and outlined an expected life-of-mine expenditure of US$3.1 billion. The original forecast for stage one, delivered prior to an extensive fall in the value of gold, was US$4.8 billion.
The first stage of the project, which is jointly owned by South Africa’s Harmony Gold Mining Company Ltd and Newcrest Mining Ltd, was approved to move into a feasibility study by its partners in December 2014.
Feasibility of the Golpu deposit is expected to be completed by the end of this year, with first production targeted for 2020.
‘World class’ deposit
‘Stage one really targets the higher grade portion of the orebody. It mines 30 per cent of the tonnes and delivers 40 per cent of the metal content – this is of the reserve as it has been declared,’ Graham Briggs, Chief Executive Officer of Harmony Gold, told media during a recent conference call.
Describing Golpu as a ‘world-class’ deposit, Briggs added: ‘We believe our objectives (at the project) will be met, which are to target high grades to get early payback on the capital, low capital and to have a project which is scaleable… something we can build bigger in time, especially if commodity prices change.’
‘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,’ said Newcrest CEO Sandeep Biswas.
Stage one will consist of two block cave mines, the first being a 3 million tonnes per annum (mtpa) operation, which will be replaced by a deeper version operating at 6mtpa from 2024.
With an estimated mine life of 27 years, annual production for stage one is expected to peak in 2025 at 320,000 ounces of gold and 150,000 tonnes of copper.
Briggs said the JV would continue to update the 2012 pre-feasibility study for stage two of the mine and expected this component to be completed by December 2015, alongside the stage one feasibility study.
‘Stage two, which we don’t have tonnage for, it would optimise the resource and really focus on the other 70 per cent of the tonnes and 60 per cent of the metal content. We intend to go into an updated PFS on this.
‘The orebody is still open at depth and the only real way that we will be able to explore further is once we get underground to do some exploration drilling from underground,’ Briggs said.
Harmony and Newcrest each own a 50 per cent interest in the project, with the PNG Government having a right to buy a 30 per cent stake in the operation if a mining lease is granted.