In an updated feasibility study released mid-March 2018, Newcrest Mining has added almost US$170 million to the forecasted costs to develop the Wafi-Golpu copper-gold project in Papua New Guinea (PNG), bringing the cost estimate to US$2.82 billion.
|Proposed mine design|
|Proposed design of the processing plant|
Wafi-Golpu, a 50-50 joint venture between Newcrest and Harmony Gold, was previously expected to cost $US2.65 billion to build in a 2016 pre-feasibility study. Even though Newcrest has flagged the increase in development costs, it has lowered the life-of-project costs to $US5.3 billion from 2016’s $US6.3 billion.
The updated feasibility study also details a 28-year mine life, with an 18.2% internal rate of return (IRR), a larger and deeper starter block cave, and the development of a larger processing plant.
Newcrest Managing Director and Chief Executive Officer Sandeep Biswas said “The improved business case set out in the updated Feasibility Study clearly demonstrates the world-class nature of this multi-decade project.
“We are excited to have this tier 1 asset in our portfolio with an IRR of 18%, first quartile production costs and decades of operating life. We have a clear pathway forward for the project and together with our Joint Venture partner, we are committed to working with the Government and people of PNG to progress this world-class asset.”
Production and Cashflow profile
The project is estimated to generate free cashflow averaging around $0.9bn per annum in the first ten years post commercial production (including being over $1bn in five of these years) in line with the grade and recovery profile of the ore milled. Periods of lower annual free cash flow reflect lower grade and recovery of the ore milled generally towards the end of production from the first two caves, together with the capital expenditure required to develop additional block cave extraction levels.
Relative to the prior studies, maximum cumulative negative free cash flow has increased by approximately $1bn.
It is proposed that the first block cave, BC44, be situated at 4,400mRL. This deeper block cave with a larger footprint, compared to prior studies, results in a net increase in mining capital expenditure of approximately $70m. The second block cave, BC42, will be situated at 4,200 mRL. These block caves are expected to be mined for 7 and 9 years respectively during the first 14 years of the mine life. The third block cave, BC40, proposed to be situated at 4,000 mRL, is expected to be mined for 16 years leading to a total mine life of 28 years from first production of the processing plant (excluding construction and closure phases).
The ore body will remain open at depth and ultimate life of mine is still to be determined.
Due to high surface ambient temperatures and humidity, and the depth of the mine, considerable ventilation and cooling capacity is expected to be installed to ensure the health and safety of mine workers.
The mine dewatering designs include the dewatering from the block caves to surface using a cascade pumping system. Emergency dewatering in the case of extreme rainfall entering the cave through the subsidence zone is also catered for. The extraction level is sloped away from the crusher chambers to provide emergency surge storage capacity. In addition, all pump stations and electrical equipment associated with dewatering are installed above the flood line, to ensure mine dewatering can still be achieved during and after a flood event.
The proposed Watut Process Plant is a compact copper concentrator that is progressively built to be capable of safely and efficiently processing 17Mtpa of crushed ore to produce a high-grade copper concentrate.
The facility comprises a semi-autogenous grinding mill, two ball mills and a recycle crushing configuration, flotation, thickening, concentrate pumping and tailings pumping systems. The facility is designed to recover copper and gold on average over Life of Mine at 95% and 68% respectively. Concentrate grade average over the Life of Mine is assessed to be 29% copper and 15g/t gold.
The Watut Process Plant is designed to treat approximately 8.4Mtpa of ore for the first three years of operation.
The proposed installation of the Golpu pyrite flotation and regrind circuit the following year facilitates the processing of ore containing a higher metasediment content from year five onwards.
Three types of tailings management options have been considered during the various studies undertaken since 2012, those being various terrestrial tailings storage facilities, dry-stacking and DSTP, with DSTP being the preferred tailings management solution.