JOHANNESBURG (miningweekly.com) - ASX- and TSX-listed Marengo Mining has been quoted $1.42-billion for a turnkey engineering, procurement and construction (EPC) contract to develop its Yandera copper/molybdenum/gold project, in Papua New Guinea.

The pricing was received from Chinese engineering, construction and mining company China Nonferrous Metal Industry’s construction arm, Foreign Engineering and Construction (NFC), and was subject to contract completion.

The EPC contract would include the implementation of processing facilities, crushing and grinding facilities, mine infrastructure, administration facilities, an access road, a concentrate pipeline, a filter plant, a port site development, a shiploader and the construction of a tailings dam.

Marengo said the pricing provided a foundation for the completion and delivery of the feasibility study (FS) of Yandera, which was scheduled to be completed in March.

Extensive work had been completed as part of the Yandera FS and a final review of the study, which was being prepared by Mining One, Ravensgate Mining Industry Consultants and Arccon Mining Services, together with other Australian and international consultancies, had been under way since late 2012.

The FS suggested increasing the anticipated mine throughput rate to 30-million tons a year, with good metallurgical recoveries and concentrate grades having been revealed and further optimisation work in mine planning, pit design and tailings management having been carried out.

Copper recoveries from fresh samples, taken from three main zones of the Yandera deposit varied from 85% to 95% with copper concentrate grades varying from 25% to 40% for copper, with gold, silver and molybdenum recoveries also at economic levels.

Optimisation work performed earlier this year on the Gremi and Imbruminda zone's bulk samples revealed good recoveries, achieving a copper recovery of 95.8% and a final concentrate grade of 40% copper.

Testwork performed on Imbruminda samples reported copper recovery of 94% and a final concentrate grade of 41% copper, with good levels of molybdenum, gold and silver also recovered.

Despite the potential increased throughput, capital expenditure (capex) numbers remained below the company’s prior guidance at between $1.7-billion and $1.85-billion.

Other infrastructure, including the mining fleet, pre-stripping and power transmission lines, subject to the completion of the pending FS, was estimated to be between $300-million and $400-million.

"Marengo's Yandera project is a high priority for NFC. We remain fully supportive of Marengo as it advances the development of the project," NFC president Wang Hongqian said.

Marengo president and CEO Les Emery said the fixed-price EPC quote served as recognition of the value of the Yandera project.

Meanwhile, Marengo’s chief shareholder, Sentient, would provide an unsecured, interest-bearing working capital facility of $10-million, as a result of the extensive revision of the FS and the additional optimisation opportunities currently being considered.

It was repayable on or before December 31.