JSE-listed Harmony Gold said on Monday that the results of the Stage 1 feasibility 1 and Stage 2 prefeasibility studies for the Golpu gold project in Papua New Guinea (PNG) supports proceeding with the project as they confirmed a robust investment case.

New Harmony Gold chief executive officer Peter Steenkamp says that Golpu is part of Harmony Gold’s future and will create value for its shareholders in the long term.

The Golpu porphyry deposit is a world-class resource due to its size, high grades, long-life and low operating costs and is being developed through the Wafi-Golpu Joint Venture by Harmony Gold and Newcrest Mining, with a 30% buy in option from the PNG government.

Located approximately 65km south-west of Lae in the Morobe Province of PNG, the proposed development of the mine allows optionality and flexibility to scale the operation up with a relatively low capital investment in response to increasing commodity prices.

Mineral Resource

Harmony’s 50% interest of the Golpu ore reserve is 5.5 Moz of gold and 2.4 Mt of copper as at 31 December 2015.

Stage 1 Feasibility study findings

The Stage 1 Feasibility study justifies the development of twin exploration access declines and all associated infrastructure required, with two proposed block caves (BC 1 and BC 2) designed to extract approximately 50% of the contained metal (gold and copper) of the Golpu reserve.

Stage 1 targets higher-grade sections of the deposit thereby optimising free cash flow, while the development of the near surface BC 1, as part of Stage 1, affords early cash flow thereby reducing the maximum negative cash outflow.

The approximately 50% remaining reserve is planned 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.

Stage 2 prefeasibility findings

Meanwhile, 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 Mtpa capacity from Stage 1 BC2. The debottlenecking increased the production capacity to 7 Mtpa by making minor and low cost modifications to the process plant grinding circuit and the underground material handling system.

The access declines to the block caves in both the Stage 1 feasibility study and Stage 2 pre-feasibility study were treated as common path access imbedding optionality and flexibility in the designs to scale the operation up with a relatively low capital investment in response to increasing commodity prices.

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 a capacity of 7 Mtpa will be constructed to bring total plant capacity to 14 Mtpa.

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 company said that 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.

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