Optimization work on the feasibility study for Marengo Mining’s Yandera Copper-Molybdenum-Gold Project in Madang province is ongoing while the company is also continuing discussions with a number of groups regarding provision of power to the project.
The Yandera Central Porphyry System, which is 95km southwest of the port of Madang within the highly prospective New Guinea copper-gold belt, contains one of the largest undeveloped porphyry copper-molybdenum-gold systems in the South West Pacific.
In October 2010, the company signed an MoU with China Nonferrous Metal Industry’s Foreign Engineering and Construction Co Ltd (NFC), for the financing, construction and development of the project. As part of the MoU, NFC agreed to undertake the key phase of process plant design work, as well as working with the company in other areas, for the project development.
During 2013, Marengo received from NFC pricing for a lump sum, Engineering, Procurement and Construction (EPC) contract for development of the project. This pricing was subsequently incorporated into the feasibility study. NFC prepared its EPC pricing by working in parallel with the feasibility study team, as part of the overall development strategy for Yandera. Marengo continues to work with NFC to explore various structures for an ongoing relationship, as the project moves to the next phase.
Following a review of the technical work undertaken as part of the feasibility study, the company’s Board decided that additional work is required in a number of specific areas before a final feasibility study can be prepared. This includes identifying an alternative cost-competitive source of power for the project, after Marengo’s preferred third party power provider withdrew from the proposed power supply arrangements.
Discussions on this matter are being held with a number of organizations, including the PNG Government. Marengo also has a non-binding MoU with the Madang Development Corporation, the business arm of the Madang Provincial Government, to identify potential power solutions for a number of industries in the province.
So far, work on the feasibility study indicates that Yandera has the potential to generate substantial cash flow, however in the absence of a power solution that can support the project, it is exposed to escalating capital and operating costs. The objective of the review is to help ensure that the project is robust at all phases of the commodity price cycle.
Dimbi Drilling completed a nine hole campaign in 2013, identifying near-surface higher grade zones with important strategic implications, for future mine start-up. Best results from the campaign are 129 metres from 69 metres @ 0.53% copper, including 28 metres @ 0.71%; 42 metres from 93 metres @ .082%; and 90 metres from 150 metres @ 0.51%. Significant copper grades were intersected in seven of the nine widely spaced drill holes.
Marengo remains committed to the development of Yandera and is pleased with the support that the company has received from its strategic partner NFC, the PNG Government, as well as the financial support from its major shareholder The Sentient Group.