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Golpu project to proceed to feasibility stage

27th February 2015

  

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Gold miner Harmony Gold will progress its Golpu project, in Morobe province, Papua New Guinea (PNG), to the feasibility study stage this year following the approval of the project’s updated prefeasibility study (PFS) in December.

The feasibility study for the first stage and the updated PFS for the second stage of the project is scheduled to be completed by the end of this year.

The recently approved updated PFS covers the first stage of Golpu’s development targeting the upper higher-value portion of the orebody, in conjunction with work to bring about a second stage mine development, which will encompass the rest of the ore reserves.

The updated PFS shows low development capital cost, targets high grades to increase free cash flow generation and demonstrates the potential of this “world-class orebody”.

“The updated PFS supports our view that Golpu is a spectacular orebody with a large affordable and mineable copper component.

“Golpu contains mineral resources of 20-million ounces of gold and 9.4-million tonnes of copper.

“Key objectives of the PFS have been achieved by reducing the capital cost of the project, lowering operating costs and improving the rate of return”, says Harmony Gold CEO Graham Briggs.

He notes that the development of the Golpu project aligns with Harmony’s strategy of pursuing profitable, low-cost operations.

Golpu’s required Stage 1 project capital, on a 100% basis, is estimated at $2.3-billion, yielding an attractive return on investment with an internal rate of return of 17%.

The updated PFS recommends the development of twin exploration declines to establish further geotechnical and geological data to support the feasibility study.

A decision on the declines is expected in the first half of this year and the two proposed block caves in Stage 1 are designed to access about 40% of the contained metal (gold and copper) of the Golpu reserve.

The mining and processing infrastructure of Stage 1 would then be used to support development of Stage 2.

Briggs notes that, incorporating this project, Harmony’s attributable yearly production is expected to average at 500 000 oz/y gold equivalent in 2024 to 2029, adding that the Golpu project’s first stage is expected to have a life of about 27 years.

“The Golpu project is a significant value accretive game changer for Harmony”, says Briggs.

“Harmony intends to fund the earlier stages of the project from internal cash flows, and review other funding options for the latter stages. In the current environment of volatile gold prices, we are focused – more than ever – on cost control and cash generation at existing operations.

“In addition, shareholder value is created through investing in Golpu, securing a sustainable, profitable future for Harmony,” Briggs says.

Meanwhile, the Golpu project team, with the assistance of project delivery and consulting services provider WorleyParsons as project consultant, have incorporated a total of 52 000 new drill core samples into the updated PFS – significantly improving the understanding of the mine’s geological framework.

This has redefined the boundaries of the high-grade porphyry event in the upper part of the orebody, which will be mined by block caving method.

This enables a reduction in the size of the footprint of the block caves, compared with the 2012 PFS, significantly reducing capital requirements.

Further, engagement with key stakeholders, including the PNG national government, the Morobe provincial government, landowners and community representatives continues to ensure clear alignment on the project objectives.

Golpu has the potential to deliver significant benefits to local and regional communities and the broader economy of PNG, including local business opportunities, taxation and royalty revenues to all levels of government.

It will also offer benefits through training and employment opportunities, business and community development programmes, health and education investments and improved regional infrastructure, Harmony states.

Environmental baseline studies and risk and impact assessments were undertaken as part of the updated PFS and will be further developed during the feasibility study in preparation for the submission of an environmental- and social-impact assessment to the PNG government for consideration.

 

Edited by Leandi Kolver
Creamer Media Deputy Editor

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