The Asia Miner

JUN 2018

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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Papua New Guinea the asia miner • volume 15 • issue 2 31 EMERGING SE ASIA: Papua New Guinea 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 esƟmate to US$2.82 billion. 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 ExecuƟve Officer Sandeep Biswas said "The improved business case set out in the updated Feasibility Study clearly demonstrates the world-class nature of this mulƟ-decade project. "We are excited to have this Ɵer 1 asset in our porƞolio with an IRR of 18%, first quarƟle producƟon costs and decades of operaƟng life. We have a clear pathway forward for the project and together with our Joint Venture partner, we are commiƩed to working with the Government and people of PNG to progress this world-class asset." PRODUCTION AND CASHFLOW PROFILE The project is esƟmated to generate free cashflow averaging around $0.9bn per annum in the first ten years post commercial producƟon (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 producƟon from the first two caves, together with the capital expenditure required to develop addiƟonal block cave extracƟon levels. RelaƟve to the prior studies, maximum cumulaƟve negaƟve free cash flow has increased by approximately $1bn. MINE DEVELOPMENT 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 respecƟvely 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 producƟon of the processing plant (excluding construcƟon and closure phases). The ore body will remain open at depth and ulƟmate life of mine is sƟll to be determined. Due to high surface ambient temperatures and humidity, and the depth of the mine, considerable venƟlaƟon 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 extracƟon level is sloped away from the crusher chambers to provide emergency surge storage capacity. In addiƟon, all pump staƟons and electrical equipment associated with dewatering are installed above the flood line, to ensure mine dewatering can sƟll be achieved during and aŌer a flood event. PROCESSING PLANT 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 configuraƟon, flotaƟon, 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% respecƟvely. 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 operaƟon. The proposed installaƟon of the Golpu pyrite flotaƟon and regrind circuit the following year facilitates the processing of ore containing a higher metasediment content from year five onwards. TAILINGS MANAGEMENT Three types of tailings management opƟons have been considered during the various studies undertaken since 2012, those being various terrestrial tailings storage faciliƟes, dry- stacking and DSTP, with DSTP being the preferred tailings management soluƟon. Proposed design of the processing plant Newcrest ups Wafi-Golpu development cost Proposed mine design

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