PERTH (miningweekly.com) – A prefeasibility study (PFS) on the expansion of the Cadia operation, in New South Wales, has estimated a capital investment requirement of $598-million, gold miner Newcrest Mining reported.

Some $58-million of capital investment would be required to expand the current plant from 30-million tonnes a year to 33-million tonnes a year, while an additional $540-million will be required for the full development of the PC2 – 3 panel cave.

“Two years ago, we set out to expand Cadia to 32-million tonnes a year for an expected cost of $310-million, today we announce expanding the plant to 33-million tonnes a year for $58-million tonnes with potential to grow to 35-million tonnes a year,” said Newcrest MD and CEO Sandeep Biswas.

“The study has delivered a $252-million saving and an additional one-million tonne a year of throughput capacity. The project team have applied an owner’s mindset in delivering an expansion plan with a low capital intensity, which has the potential to deliver an impressive 21% return on capital and ensures Cadia remains a tier 1 producer for a long time to come.”

Newcrest noted that the current Cadia process plant has already been progressively debottlenecked from 26-million tonnes a year, when Cadia East was commissioned, to the current rate of 30-million tonnes a year, with the study identifying further debottlenecking opportunities to increase the rate to 33-million tonnes a year, and options to further debottleneck to 35-million tonnes a year will be assessed during the feasibility study.

The PFS identified a maximum mining rate of 39-million tonnes a year was achievable, but only for periods of time between construction of block caves.

Newcrest said that the PFS found that by increasing throughput to the 33-million-tonne-a-year rate would bring forward gold and copper production, with gold production possibly peaking at some 1 380 oz/y gold equivalent, before averaging to 800 000 oz/y of gold between 2024 and 2048.

The PFS estimated a project net present value of $887-million and an internal rate of return of 21%, with a pay-back of some eight years.

A feasibility study into the expansion will now be undertaken, which will be completed in the first half of 2019.

In the meantime, Newcrest will apply for a modification to Cadia’s project approval for the expansion, once the investigation into the Northern Tailings Storage Facility embankment slump has been completed, and studies to confirm the long-term tailings solution for Cadia have been finalised.

The development of PC2-3 would not require any further permitting.

Meanwhile, Newcrest on Wednesday also reported a 16% increase in underlying profits, and an 11% interest in earnings before interest, taxes, depreciation and amortisation (Ebitda) for the full year ended June.

Underlying profits for the 12 months ended June reached $459-million, up from the $394-million reported in 2017, while Ebitda reached $1.56-billion, up from $1.4-billion.

Gold production for the year declined by 1% on the previous financial year, to 2.34-million ounces, while copper production was down 7% to 77 975 t. Despite the lower production, revenue increased by 2%, to $3.5-billion, up from $3.4-billion.

“Newcrest delivered $1.6-billion in Ebitda and over $600-million in free cash flow in the financial year 2018. Strong operating performance across our assets was underpinned by a significant improvement in our safety performance, with a 28% reduction in total recordable injury frequency rates,” said Biswas.

“The Cadia East panel cave continued to expand and the operation achieved its target of an annualised production rate of 30-million tonnes in June 2018, a key milestone for the operation. Lihir again achieved record annual mill throughput and gold production and strong free cash flow generation.

“All operations were free cash flow positive,” Biswas said.

“We invested in our future growth by advancing Wafi-Golpu, our world-class gold/copper development project, and by completing the Cadia expansion PFS that outlines an attractive path towards further expansion of this core asset. We also made an equity investment in Lundin Gold, giving us exposure to the promising Futa del Norte gold asset in Ecuador.”

Looking ahead, Newcrest is expecting gold production to reach between 2.35-million and 2.6-million ounces, while all-in sustaining costs will reach between $1.87-billion and $1.97-billion.