HARMONY Gold had never been in a better position to finance and build the massive Wafi-Golpu copper/gold project in Papua New Guinea (PNG) in which it was a 50/50 partner with US gold major Newmont.
That’s according to Harmony CEO Beyers Nel who told delegates attending the London Indaba that: “Harmony is today much better equipped and positioned than at any time in its history to participate meaningfully in the building of Wafi-Golpu.”
“This is a mine that we can own and build with our joint venture partners,” he said. “From a financial position looking at the forward projection of where our production will come in the next ten years – of which 45% will be outside the borders of South Africa – we are very well positioned to progress Wafi-Golpu.”
Asked by conference chairman Bernard Swanepoel over the option held by the PNG government to take up to 30% in the project, Nel replied that would probably break down into 20% held by the government state-owned mining company and 10% by “in-land owner arrangements”.
Nel said the government’s stake would not be a “free carry”, but added the details were the subject of discussion.
“We are trying to come to outcomes that are mutually beneficial. If you want to be the partner of choice you have to come up with a middle ground where all three parties feel it is an equitable split and that’s what we are working on. We are quite confident that we will get a positive outcome.”
The details of the government’s 30% free carry are part of the on-going discussions over the special mining licence (SML) that must be granted for the mine to be developed. This has been delayed for years.
Nel said the long delay in getting the SML approved could be attributed to caution on the part of the PNG government. “It’s a sign of the times we live in and how governments around the world are sometimes cautious because of ‘once bitten twice shy’ considerations,” he said.
He pointed out that in PNG the tenure of an SML was 40 years. “So that’s a long-term marriage. You want the pre-nup [pre-nuptial] to be perfect because you are going to have to live with what is in there for a very long time.”
Eva Copper
Turning to Australia where Harmony has announced two copper mining deals in the past year Nel said the group hoped to announce an investment decision on the proposed Eva Copper mine development by the end of August.
He added that, if the group went ahead with Eva, it would boost Harmony’s annual copper production to a total of 100,000 tons within three years including output from the existing MAC Copper mine Harmony has just bid $1.03bn in cash.
Queried by Swanepoel over his choice of words which seemed to call into question whether Eva would be built, Nel replied this was because of “governance” requirements around the deal. “We have to use the right terms at the right times,” he said.
“We acquired the mine which was fully permitted with a feasibility study but we saw the opportunity to build a bigger mine and that bigger mine required an updated feasibility study. That required minor amendments to the permits that were in place such as water usage. We are finalising all of that and are hoping to bring the outcomes of all this to the market in late August and then make an investment decision,” said Nel.
