PERTH (miningweekly.com) – ASX-listed PanAust on Monday reported that its $125-million acquisition of diversified miner Glencore’s 80% interest in the Frieda River copper/gold project, in Papua New Guinea, was nearly complete.

The acquisition was announced in November last year, and PanAust said that the conditions precedent to the transaction had been satisfied under a share sale and purchase agreement.

The transaction was scheduled to close on August 25.

Under the agreement, PanAust would pay an initial $25-million on completion of the transaction, and would reimburse Glencore for its expenditure on the project since November 1, 2013.

A further $50-million would be payable to Glencore at the end of December next year.

In addition, on the successful completion of a mining operation at Frieda River, Glencore would receive a 2% net smelter return royalty on PanAust’s interest in the project, to a total aggregate of $50-million.

ASX-listed Highlands Pacific owns the remaining 20% interest in the Frieda River joint venture (JV).

The project is one of the largest undeveloped copper and gold deposits in the world, and the most recent feasibility study had considered a project with the potential to deliver an openpit mining operation averaging around 190 000 t/y of copper and 280 000 oz/y of gold, over a 20-year life-of-mine.

However, as part of its due diligence, PanAust conducted a scoping study based on a smaller-scale 24-million-tonne-a-year conventional openpit and flotation operation, providing an average 100 000 t/y of copper and 160 000 oz/y of gold over an 18-year mine life.

As majority owner of the project, PanAust would be responsible for the costs incurred by the Frieda River JV to finalise the definitive feasibility study for its concept development, and would also appoint and fund the cost of an independent expert to provide a peer review of the study.

Further, PanAust would be responsible for sole funding the costs to maintain the project site, assets and community relations programmes until the lodge of a mining lease or special mining lease application.