By Sasha Pei-Silovo – EM TV Online
The Board of Newcrest Mining Limited has approved the progressing of ‘stage one’ to feasibility study and for work to continue on the updating of the 2012 pre-feasibility study for stage two of the Golpu project, scheduled for completion in 2015.
The Golpu deposit constitutes part of the Wafi-Golpu project which is located 65 kilometres from Lae, Morobe Province. Melbourne-based gold mining heavyweight Newcrest and Harmony Gold Mining Limited each have a 50 per cent stake in the project through the Wafi-Golpu Joint Venture (WGJV).
According to Newcrest, the proposed mine site sits at an elevation of approximately 400 metres above sea level in moderately hilly terrain and is located near the Watut River approximately 30km upstream from the confluence of the Watut and Markham rivers.
Through the update of the 2012 pre-feasibility study, it has been established that there is an improved business case for the Golpu project, by splitting into two stages.
The higher value fraction of the ore body is targeted through stage one of the Golpu gold and copper project; while the pre-feasibility study for stage two of the project is updated which will encompass the rest of the ore reserve.
“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,” Newcrest Managing Director and Chief Executive Officer, Sandeep Biswas said.
“Progressing stage one to the feasibility study stage aligns with Newcrest’s strategy of profitable growth through low-cost operations.”
The Golpu project was originally forecast to cost $US4.8 billion; with capital expenditure of stage one forecast at US$2.3 billion (100 per cent) with life of mine estimated capital expenditure of US$3.1 billion (100 per cent).
The production at stage one is expected to begin in 2020, with annual output expected to peak at 320,000 ounces of gold and 150,000 tonnes of copper in 2025.
Production for the original project was forecast to peak at 550,000 ounces of gold and 330,000 ounces of copper.
At the core of the project’s development are ongoing engagements with key stakeholders, which include landowners and community representatives, the Morobe provincial government and the national government.
This is to have an established “suitable and sustainable framework for the advancement of the project.”
Newcrest is one of the world’s largest gold mining companies and operates mines in four countries, with a global workforce of around 10,000.
The Papua New Guinea government has the option of taking a 30 per cent stake in the project, which would reduce Newcrest and Harmony’s 50 per cent shares to just 35 per cent.
At close of trading on Monday, Newcrest shares closed down five Australian cents at $10.67 a performance described as being “marginally better than the wider market.”
Early November saw shares in the group trading at around $8.60 but in line with the gold price, have climbed, which is finding favour as a safe haven while other commodity prices broadly slide.
Gold was trading at $US1216.92 an ounce on Monday, compared with less than $US1150 early last month.