NEWCREST Mining has revised the business case for its Wafi-Golpu gold mine, splitting the planned development into two stages and reducing the cost in turn.

The revised plan would see Newcrest develop two block cave mines in stage one of the plan, with the first block cave operating at 3 million tonnes per annum (Mtpa), which will be replaced by a deeper block cave operating at 6Mtpa in a steady state from 2024.

The company said stage one has a mine life of 27 years, with annual production expected to peak at 320,000 ounces of gold and 150,000 tonnes of copper in 2025.

Stage one will target the upper higher value portion of the ore body, while stage two will encompass the rest of the ore reserve, focusing on a third block cave mine.

“The updated pre-feasibility study demonstrates the potential of this world class ore body, which contains mineral resources of 20 million ounces of gold and 9 million tonnes of copper,” Newcrest said.

Newcrest’s board has approved stage one progressing to feasibility study and for work to continue on updating the 2012 pre-feasibility study for stage two, with both scheduled for completion by the end of the calendar year 2015.

Stage one capital expenditure is forecast at US$2.3 billion with life of mine estimated capital expenditure of US$3.1 billion. First production is expected by 2020.

Maximum cumulative negative cash flow is forecast to be US$1.6 billion, Newcrest said.

The initial 2012 Golpu pre-feasibility study set out costs at US$4.8 billion for the development.

Newcrest managing director Sandeep Biswas said moving stage one of the plan to the feasibility study stage aligned with Newcrest’s strategy of profitable growth through low cost operations.

“By targeting the high value core of the ore body first, we have increased the economic returns from the mine by being cash flow positive earlier in the life of the mine as well as funding the infrastructure that will support future stages of ore extraction and processing.”

The Golpu deposit forms part of the Wafi-Golpu project, located 65 kilometres from Lae in Papua New Guinea.

Newcrest and Harmony Gold Mining each hold a 50% interesting in the project through the Wafi-Golpu joint venture.