aussie pain is png's gain, page-2

Newcrest-Harmony project in PNG is world-class opportunity

by: Barry Fitzgerald
From: The Australian
August 29, 2012 3:36PM

Increase Text Size
Decrease Text Size
Print

NEWCREST Mining and South African partner Harmony have confirmed their Wafi-Golpu project in Papua New Guinea's Morobe province as a world class gold-copper development opportunity.

But it will also come with a world-class development bill - the pre-feasibility study for the project pegs it at $US4.8 billion ($4.62bn).

The development cost is nevertheless below market expectations for a $US5bn bill and confirms that, on a copper-equivalent basis, Wafi-Golpu will be one of the lowest-cost copper developments in the world on a pound-for-pound basis.

Today's release of the study came with a new resource estimate for the Golpu deposit which, along with Wafi, are draped over a hillside in the Morobe province, 65km west off Lae. A new resource estimate for Wafi is being worked on.

The all-up resource estimate for Wafi-Golpu and the Nambonga deposit now stands at 22.9 million ounces of gold, 7.46m tonnes of copper and 42.4m oz of silver.
The new indicated resource estimate for Golpu is 12.4m oz of gold and 5.4mt of copper. That is an increase of 11m oz of gold and 4.7mt of copper. A further 5.7m oz of contained gold, 1.6mt of copper and 8.1m oz of silver sit in the inferred mineral resources category.

Wafi-Golpu is currently owned 50:50 by Newcrest and Harmony. The PNG government can take up to a 30 per cent interest in the project at a price equal to the sunk cost. Newcrest has also indicated a willingness to buy Harmony out of the project, but Wafi-Golpu is central to that group's strategic plan.

First production would be possible by 2019 if development proceeds. In the project's favour is the fact that gold and copper remain the last of the commodities to hold on to their historically high levels, in the face of the European debt crisis, the slowdown in China and patchy economic growth in the US.

The pre-feasibility study estimated an initial mine life of 26 years with annual production of up to 550,000oz of gold and 330,000t of copper. Cash costs of production were said to be in the "first quartile" when applying either the gold or the copper as by-product revenue.
The release of the study comes as work resumes at Newcrest's wholly-owned Lihir gold mine on the PNG island of the same. The mine - which is being expanded to annual production of more than 1m oz of gold at a cost of $US1.3bn - was closed on Sunday due to a dispute with local landowners on a compensation-and-benefits package.

http://www.theaustralian.com.au/business/mining-energy/newcrest-harmony-project-in-png-is-world-class-opportunity/story-e6frg9dx-1226460905820

With only 5 percent drilled to date MGO's got plenty of upside compared to Wafi-Golpu.

Raider