Harmony strikes more gold

HARMONY Gold’s final pre-feasibility study for its Golpu joint venture project in Papua New Guinea has resulted in a 31% increase in its gold equivalent reserves to 52.9 million ounces.
The company said the study confirmed that Golpu, which is part of the bigger Wafi-Golpu project and a 50:50 joint venture with Newcrest Mining, had potential to host more than one mine.
A probable mineral reserve estimate of 12.4 million ounces of gold and 5.4 million tonnes of copper on a 100% basis has been reported.
This has resulted in gold equivalent ounces almost quadrupling from 2010 numbers to 39 million ounces.
This is based on 450 million tonnes at 1.21% copper and 0.86g/t of gold.
The resource for Golpu, which includes less certain ounces, has doubled from 32 million gold equivalent ounces in 2010 to 65 million gold equivalent ounces this year.
Gold equivalent ounces are calculated assuming US$1,400 per ounce of gold, US$3.50 per pound of copper and US$25 per ounce of silver with 100% recovery for all metals.
This has proved to further diversify the gold miner’s gold reserves away from its reliance on South Africa with PNG now representing 42% of the company’s total reserves in comparison to only 11% last year.
First production in the study has been scheduled for 2019 with an estimated mine life of 26 years.
A base case scenario shows annual production of 490,000 ounces of gold and 290,000 tonnes of copper for 10 of those years.
Due to the scale of the ore body, safety considerations and efficiency, the mining method best suited for the Golpu deposit was block caving, chief executive Graham Briggs said in a webcast on Wednesday morning.
The study has also indicated that the project would fall within the first quartile of cash costs for both gold and copper.
The PNG government has a right to acquire, at any time up to the date of the granting of a mining lease, a 30% interest at cost in the Wafi-Golpu joint venture.
Briggs confirmed in the webcast that there would be no free carry for the PNG government and that they would have to pay their full share of historical costs should they decide to take a 30% stake.
“This is a game changer in PNG and could add significant amounts to GDP for the country,” Briggs, who was uncertain whether or not the PNG government would exercise its option, said.
He said that talks would continue and that in his opinion the government would take a broader approach and was unlikely to put all of its money just into Golpu.
Capital estimated for the project is US$4.85 billion and is expected to be funded through internal cash flows and potentially also various forms of debt depending on the future gold price.