A feasibility study has confirmed that the Frieda River copper-gold joint venture in north-western East Sepik province is the country’s largest undeveloped open pit project, and among Asia-Pacific’s tier 1 copper-gold sites. The study outlines the project will require an estimated initial capital investment of US$5.6 billion, for a 20-year open pit mine life capable of annually producing an average 304,000 tonnes of copper and 451,000 ounces of gold in its first five years.
72%-shareholder X-Strata Copper says the study includes a number of changes to the 2010 pre-feasibility study with the substitution of a hydro-electricity scheme with a gas-generated electricity source. It also outlines the potential for US$5 billion in capital savings in relation to the project’s waste disposal.
Further discussions are being scheduled between X-Strata, 18%-shareholder Highlands Pacific and the Papua New Guinea government regarding equity ownership, permitting and the project’s development timeline.
“Highlands believes the investment case for Frieda is compelling, given that copper remains one of the few global commodities that all analysts agree is facing a long-term and structural supply deficit,” says Highlands Pacific’s managing director John Gooding. “Projects of Frieda’s scale and resource quality are rare due to its low strip ratio, clean concentrate produced and its multi-decade open pit operation.
“We will hold discussions with all parties to determine the project’s development path and the desire of the PNG government to take up a direct 30% equity stake in the project.” John Gooding says subject to these talks and development approvals, construction of the project could commence in 2015 with production achieved by 2020.
Highlands Pacific is expected to make a final investment decision for the project this year, once the renewal of exploration licences due in May and November are received. X-Strata announced in June 2012 it was putting its stake up for sale in a bid to conserve capital.