Stage 1 feasibility and Stage 2 pre-feasibility studies for the Golpu component of the Wafi-Golpu Joint Venture between Harmony Gold and Newcrest Mining have confirmed a robust investment case that supports proceeding with the project, which is in Papua New Guinea.

The robust results of the feasibility study are supported by high grades and early cash flow while costs will be in the lowest quartile for copper.

“The Golpu porphyry is a world-class resource due to its size, high grades, long-life and low operating costs,” said Harmony CEO Peter Steenkamp. “The design of the mine allows optionality and flexibility to scale the operation up with a relatively low capital investment in response to increasing commodity prices.”

The Stage 1 project capital on a 100% basis is estimated at US$2.6 billion, yielding an internal rate of return of 16%. The low operating costs will withstand low commodity price cycles and will benefit from high returns in higher commodity price cycles.

The Stage 1 feasibility study justifies the development of twin exploration access declines, with two proposed block caves designed to extract approximately 50% of the contained metal (gold and copper) of the Golpu reserve. The approximately 50% remaining reserve is to be extracted by a deeper block cave (BC3) below block cave 2 (Stage 2). The common path mining and processing infrastructure of Stage 1 will be utilised in support of the development of Stage 2.

Engagement with key stakeholders, including the PNG national government, the Morobe provincial government, landowners and community representatives continues so as to ensure clear alignment on the project objectives.

The project will only progress into execution upon the grant of a Special Mining Lease (SML) which will include all necessary permits, approvals and consents required from the Papua New Guinea Government, landowners and other relevant stakeholders.

If a pre-mining development agreement is signed prior to the grant of a SML, approval will be sought from the Boards of both Wafi Golpu JV parties to bring forward the advanced exploration work and earthworks for establishment of the access declines. Advanced exploration via underground access will afford an opportunity to obtain further data at depth and as a result, a revisit of the current proposed Stage 1 base case capital profile, schedule and execution approach.

The Stage 2 pre-feasibility study was conducted in parallel to the Stage 1 feasibility study. The first step of Stage 2 looked at debottlenecking the 6 million tonnes/annum capacity from Stage 1 BC2. The debottlenecking increased the production capacity to 7 million tonnes by making minor and low cost modifications to the process plant grinding circuit and the underground material handling system.

The second step for Stage 2 is increasing the mine’s production rate. By optimising all existing Stage 1 infrastructure and increasing the size of the underground loader fleet a higher mining production output from BC2 can be achieved, without a significant capital investment. A second process plant with annual capacity of 7 million tonnes will be constructed to bring total annual plant capacity to 14 million tonnes.

The third and final stage investigated by the pre-feasibility study for Stage 2 was to extend the life of the operation with the construction of a third block cave below BC2. Additional capital is required to extend the decline access and conveyor belt system, the ventilation system and establish the associated underground infrastructure.

The Golpu mineral resource has also been updated to align with the results of the studies. The key change is the applied cut-off grade that defines the volume with reasonable prospects of eventual economic extraction.

The current mineral resource is 820 million tonnes @ 0.70 grams/tonne (g/t) gold for 18.6 million ounces, 1.1% copper for 8.6 million tonnes, 1.3 g/t silver for 33.1 million ounces and 90 ppm molybdenum for 74,000 tonnes. It includes 690 million indicated tonnes and 140 million inferred tonnes.

This compares to the previous resource of 1.08 billion tonnes @ 0.59 g/t gold for 20.2 million ounces, 0.87% copper for 9.4 million tonnes, 1.09 g/t silver for 37.5 million ounces and 94 ppm molybdenum for 100,000 tonnes.

Harmony and Newcrest each own 50% of Golpu. The PNG Government retains the right to purchase, for its pro-rata share of historical costs, up to a 30% equity interest in any mineral discovery at Wafi-Golpu, at any time before the commencement of mining. If the PNG Government chooses to take-up its full interest, the interest of each of Newcrest and Harmony will become 35%.

Golpu is about 65km south-west of Lae in Morobe Province. The proposed mine site sits at an elevation of approximately 400 metres above sea level in moderately hilly terrain and is located near the Watut River.

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