JOHANNESBURG (miningweekly.com) – Harmony Gold’s new “game changing” copper and gold play in Papua New Guinea would enable a more risk-diverse portfolio, with the company now “getting into position” to develop its 50% joint venture project with Australian gold miner Newcrest Mining.

The $2.3-billion Golpu project showed a “spectacular” orebody with a large copper component that was “affordable and mineable” and its development would be a “big focus” this year, Harmony CEO Graham Briggs said during a conference call on Monday.

The gold miner had applied for an environmental permit from Papua New Guinea’s Department of Environment and Conservation to start advanced exploration and feasibility support activities, including the development of access roads, decline development to the orebody and associated works.

Following the completion of the prefeasibility study covering Stage 1 development, which targeted the upper higher value portion of the orebody, the company had now completed the Stage 2 concept study, which demonstrated a technically feasible and economically viable plan to mine and process the remaining portion of the Golpu copper-gold reserve after depletion of Stage 1.

Stage 1 targeted first production in 2020 and was expected to have a life of about 27 years.

Harmony, which aimed to fund the earlier stages of the project from internal cash flows, was also reviewing other funding options for the latter stages.

During Stage 1, 146-million tonnes would be extracted at an average grade of 1.02 g/t of gold and 1.6% copper.

The proposed start-up production rate is three-million tonnes a year, mined from Block Cave (BC) 1, and six-million tonnes a year, mined from the deeper BC 2.

Stage 2 would focus on BC 3.

The attributable yearly production for Harmony was a “significant” average of 500 000 gold-equivalent ounces a year from 2024 to 2029.

QUARTERLY PERFORMANCE
During the second quarter of the 2015 financial year, Harmony’s headline loss a share widened to 114c, from the 61c in the preceding quarter. The group’s basic loss a share plunged more than 100% from 61c in the first quarter of the year, to 197c apiece in the quarter ended December 31.

Harmony’s net loss for the quarter under review increased to R856-million, compared with the net loss of R266-million posted in the September 2014 quarter.

Harmony reported a 16% decline in revenue to R3.7-billion owing to a 14% decrease in gold sold to 275 851 oz and a 2% decrease in the rand gold price received to R432 963/kg.

The group also reported a 10% decrease in gold production to 271 963 oz, which, in addition to a lower gold price, also led to a decrease in production profit to R618-million in the December quarter, compared with R913-million in the previous quarter.

“Gold production during the March 2015 quarter is expected to be higher once Kusasalethu [mine's] restructuring is finalised and Hidden Valley returns to full production, positioning our operations to benefit from higher gold prices,” Briggs said.