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Harmony project not yet in the bag Posted: Tue, 22 Jan 2008 [miningmx.com] -- HARMONY Gold’s Wafi/Golpu copper gold porphyry in Papua New Guinea (PNG) needs a lot more exploration and technical work to make it “a truly attractive project”, said CEO Graham Briggs. “It’s not a dripping roast yet,” Briggs said during an analyst visit to PNG. The Golpu project can stand alone economically, but the expected returns would not be spectacular. The Golpu copper porphyry can be a 13-year mine in its own right, he said. But to boost the economics of the project and give it critical mass, Harmony needs to find another deposit of similar size. This is something the geologists working at Wafi/Golpu think is imminent. Four drills have been allocated, for example, to Nabonga, a satellite anomaly just to the north of Golpu. “The Golpu pre-feasibility study has indicated we are not quite there yet, but if we get Nabonga then we’ve got something,” Briggs said. There are another four anomalies within a 14km radius, which early exploration is showing to be promising. “This is how exploration should be. That’s why you come to PNG,” said Mike Humphries, the general manager of exploration. There is a long lead time line on developing an underground mine on just the Golpu deposit and neighbouring Wafi gold orebody, and analysts questioned whether Harmony should delay bringing the project into existence by instead exploring for more deposits to bolster the economics of the project. The mine would start production in 2014 and take two years to ramp up to full output of nine million tonnes/year. Harmony has a stretch target to bring it into production by 2012 as part of plans to have 500,000 offshore ounces of production by that year. Harmony faces capex of nearly $2bn at Wafi/Golpu. It has to conduct a $120m bankable feasibility study, including an 8.5 km decline, and build a mine, processing plant and infrastructure at the remote project in difficult terrain. Harmony is bringing a partner into the project as well at it Hidden Valley gold mine and other exploration tenements. Those thought to be on Harmony’s short list of potential partners include Barrick Gold, which has a strong presence in PNG, Newcrest, Newmont and AngloGold Ashanti. The transaction to bring in a partner should be concluded by June this year. Improving the process One of the measures to improve the returns at Golpu includes implementing an alkaline sulphide leach process to extract the third of the orebody currently sterilised by high arsenic levels. An Australian company is testing the process and should have a report on the results ready by April. “That alone makes the economics hugely different,” said Johannes van Heerden, MD of Harmony International. The nine million tonnes per annum mine, with a 15-year life would cost $1.4bn, with a third of that spent on infrastructure. It will cost around $400m to bring the gold deposits into production too. The 163 million tonne Golpu deposit has 3.9 billion tonnes of copper, 47 million pounds of molybdenum and nearly three million oz of gold. Bringing in a partner, potentially with experience of block cave mining, which Harmony envisions using to exploit Golpu, might obviate the need for the feasibility decline, cutting out a chunk of costs and speeding the project towards development, van Heerden said. Click Here to subscribe to our daily newsletter
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