Name of the Project
Frieda River copper/gold project.

Location
Papua New Guinea (PNG).

Client
The Frieda River is held by the Frieda River Joint Venture (JV), an unincorporated JV between Frieda River Limited; PanAust, a former listed Australian miner now a unit of China's Guangdong Rising Assets Management (GRAM); and Highlands Frieda, a subsidiary company of Highlands. Frieda River manages the project and holds an 80% interest; Highlands holds the remaining 20% interest.

Project Description
Frieda River is one of the largest undeveloped copper/gold deposits in the world.

The Horse-Ivaal-Trukai, Ekwai and Koki (HITEK) global mineral resource is estimated at more than 2.7-billion tonnes at an average grade of 0.42% copper and 0.23 g/t gold and contains 12-million tonnes of copper and 19-million ounces of gold.

The feasibility study envisages an initial project based on the HITEK copper/gold porphyry deposits, which comprises a large-scale, openpit mining operation that feeds ore to a conventional process plant nominally rated at 40-million tonnes a year.

Average yearly production of metal in concentrate is 175 000 t copper and 250 000 oz gold.

The initial mine life is estimated at 17 years, with 700-million tonnes of mill feed that includes 608-million tonnes of ore reserve from Horse-Ivaal-Trukai.

The mill feed represents about a quarter of the global mineral resource.

Jobs to be Created
Not stated.

Net Present Value/Internal Rate of Return
The project has a post-tax net present value, at an 7.8% discount rate, of $820-million and internal rate of return of 11%, with a payback of six years.

Value
Preproduction capital costs are estimated at R3.6-billion.

The second phase is estimated at  $2.3-billion.

Duration
First production is foreseen as no earlier than 2024/25.

Latest Developments
After nearly 50 years on the drawing board, the latest backers of PNG’s Frieda River copper project have said the time might finally be right for the giant mine to be developed– even if some hurdles remain.

Regarded as one of world's largest untapped copper/gold resources, the deposit has been dormant, as successive owners, including some of the world's biggest mining houses, proved unwilling or unable to spend the billions of dollars needed to construct a mine in remote jungle far from the country's coast.

PanAust has submitted an application for a special mining licence to the PNG government for an initial $3.6-billion project.

PanAust MD Fred Hess has pointed to the success of ExxonMobil's $19-billion liquefied natural gas plant, which has been running for two years in a country known for its difficult terrain, lack of infrastructure and sometimes fractious landowners.

"It gives the backers of Frieda River the confidence that we can get all of this together and finally make it a reality," Hess has said.

Bankers are also pencilling in Frieda River as one of a number of projects likely to be needing financing.

Analysts say factors in the project's favour include a forecast world shortage of copper in coming years, China's desire to secure supplies and the sheer scale of the project.

However, PanAust has said that it is unlikely to be issued a special mining licence needed to proceed to the initial phase of development before next year's government election.

"Our timing hasn't been all that good," said Hess. "Once the election is over and there is a mandate from government, things will begin to move smoothly," he said, although he adds that there is still a long way to go.

Bankers have also cautioned that proposed changes to mining laws are creating uncertainty, while the project will need deep pockets to build port and power facilities and an air strip, with the likely backers unlikely to have the funding capacity of an ExxonMobil.

Even with a quick go-ahead, Highlands Pacific, which has a 20% stake in the project, says the current timeline will include two years for approvals and six years for construction.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
PanAust, tel +61 7 3117 2000, fax +61 7 3846 4899 or email info@panaust.com.au.