THE base case development concept for the Frieda River Copper-Gold Project of joint venture partners PanAust Limited and Highlands Pacific now comprises an open pit and a single process plant module incorporating a SAG mill and two ball mills. This case demonstrates a higher value outcome than previous studies.

The development concept leverages off the experience gained at PanAust’s Phu Kham Copper-Gold Project in Laos which has a similar process plant configuration and compact footprint, and is located in very similar terrain.

On August 25 PanAust announced that it had completed the acquisition of an 80% interest in the Frieda River project from Glencore with Highlands Pacific holding the other 20%. It was also announced that PanAust had exercised its option to acquire about 64.5 million shares in the JV partner. This brought PanAust’s shareholding in Highlands Pacific to approximately 14%.

The following day a progress update on the development concept for Frieda River was announced by the JV. The due diligence project parameters reported by PanAust on November 1, 2013, were superseded through further data analysis and the development of a definitive scope for the feasibility study and a base case development concept.

The preliminary capital cost estimate for the base case is approximately US$1.7 billion, excluding mining fleet and power station and assumes power is supplied by intermediate fuel oil (IFO) generators. Preliminary analysis indicates that the base case development concept would be robust at a copper price of US2.80 per pound and gold price of US$1300 per ounce.

Life-of-mine mill feed is estimated to be about 600 million tonnes, a 36% increase over that contemplated in the due diligence evaluation, with an average annual processing rate of 30 million tonnes over a 20-year mine life to produce average annual copper and gold in concentrate of 125,000 tonnes and 200,000 ounces respectively.

Relatively soft ores are expected to be processed in the first five years of operation allowing mill throughput rates of more than 20% above the life-of-mine average. Thereafter the ore is expected to become progressively harder leading to throughput rates of about 20% below in the final years of operation.

A staged development approach will be considered which would require lower initial capital expenditure with a deferred capital expansion of the processing facilities in years three to five.

In addition, the feasibility study will also evaluate a hydro power option with renewable power generated by utilizing the positive water balance within the tailings storage facility (TSF) catchment, thereby augmenting IFO generated power. The lower cost of hydro power compared to IFO generated power will be weighed against the capital expenditure required to install turbines and to accelerate construction of the TSF.

It is anticipated that the feasibility study will be completed and application for a special mining licence lodges before November 2015.

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