HIGHLANDS Pacific Limited has labelled the recent lodgement of a Special Mining Lease (SML) application for the Frieda River copper –gold project as a major milestone for the company.
Highlands has been a major promoter of the world-class potential of the Frieda River project for many years and the company believes an upgraded feasibility study and the SML application lodgement by JV partner and operator PanAust have put the project firmly along the path to commercialisation.
Frieda River’s development has been hampered by its remoteness and the high costs associated with developing a massive minerals project in such a location.
However, the latest Frieda River feasibility study, which has gone a long way to addressing those issues, has provided the project partners with the confidence to apply for the all important SML.
The new feasibility study proposes a project comprised of a large-scale, open-pit mining operation feeding ore to a conventional process plant with nominal throughput capacity of 40 million tonnes per annum. Average annual production of metal in concentrate is 175,000 tonnes of copper and 250,000 ounces of gold, with an initial mine life of 17 years. The project is designed to have an average life of mine C1 cash cost of US$0.69/lb1 of copper and an all in sustaining cost of US$1.23/lb2of copper.
The Study also concludes that the project will have an estimated initial pre-production capital cost of US$3.6 billion, excluding mobile mining fleet and an oil fired power generation facility. An additional US$2.3 billion will be spent over the life of the mine on development and sustaining capital.
Frieda River represents one of the largest known undeveloped copper-gold deposits in the world and contains approximately 12 million tonnes (Mt) of copper and 19 million ounces (Moz) of gold.
The development proposal is for a multi-staged development that involves an initial project stage that forms the platform for subsequent phases of exploration, resource definition and development.
The initial Project is based on the Project’s Horse-Ivaal-Trukai, Ekwai and Koki (HITEK) copper-gold porphyry deposits.
The SML application comprises a Proposal for Development, which incorporates the feasibility study report and further supporting documents including an Employment and Training Plan, Landownership Study, and Business Development, Supply and Procurement Plan. An Environmental Impact Statement is scheduled for submission in the December quarter 2016.
Major PNG benefits
It has been estimated by ACIL Allen Consulting that the Project could increase PNG’s real GDP by a cumulative total to the year 2040 of PGK39 billion and increase real income by PGK11.8 billion. For the Sandaun and East Sepik provinces, the Project would increase real GDP by a cumulative total of PGK36 billion and increase real income by PGK5.2 billion.
However, there is still a lengthy route to commencement of mine construction with the project proponents still neeeding to make a final investment decision (FID), be granted the SML and all other necessary permits, approvals and agreements required from the Government of PNG, landowners and other stakeholders, including with respect to such matters as government infrastructure support and the declaration of the Government’s intention with respect to its level of ownership in the Project.