A multi-gen­er­a­tional mine

The Wafi–golpu gold and cop­per pro­ject could be one of PNG’S largest ever.

Business Advantage Papua New Guinea - - Petroleum Oil Search - By David James

If the Wafi–golpu mine is de­vel­oped to its po­ten­tial, it will be the largest un­der­ground mine in PNG and the first green­field mine de­vel­op­ment since the Har­mony Gold Hid­den Val­ley mine com­menced pro­duc­tion in 2009.

Bryan Bailie, Ex­ec­u­tive Pro­ject Di­rec­tor of the Wafi– Golpu Joint Ven­ture said the pro­ject has the po­ten­tial to be a ‘long du­ra­tion sus­tain­able min­ing op­er­a­tion’ that could last ‘28 to 35 years or more’.

He said the re­source at Wafi–golpu is es­ti­mated to be 820 mil­lion tonnes of min­er­alised ore at 1.05 per cent cop­per and 0.7 per cent grams of gold.

‘Wafi–golpu has the po­ten­tial to make a sig­nif­i­cant con­tri­bu­tion to the min­ing pipe­line and PNG as a whole,’ said Bailie. ‘Green­field projects of this mag­ni­tude re­quire sig­nif­i­cant in­vest­ment. Long lead times are re­quired to bring them into pro­duc­tion.’

Bailie said the min­er­alised body has ‘multi-gen­er­a­tional po­ten­tial de­rived from its large scale, its high grade and its em­bed­ded op­tion­al­ity.’

He said the cop­per grade is es­ti­mated to be ‘in the range’ of 28–30 per cent, while the gold con­cen­trate is es­ti­mated to be 5–15 grams per tonne.

Man­ag­ing risk

Bailie be­lieves a multi-staged de­vel­op­ment strat­egy is the ‘op­ti­mal ap­proach to min­ing this sub­stan­tial min­eral re­source’. The pro­ject will be rolled out in a num­ber of steps to help man­age the risk.

‘This ap­proach af­fords an un­der­ground ex­plo­ration plat­form for fur­ther min­eral re­source de­vel­op­ment, a re­duc­tion in the over­all risk pro­file in de­vel­op­ing the green­field un­der­ground block­ade mine, im­proved pro­ject port­fo­lio management and mul­ti­ple de­ci­sion-mak­ing points across the pro­ject life cy­cle, and then staged or phased cap­i­tal ex­pen­di­ture and shorter de­vel­op­ment times to first pro­duc­tion, thus im­prov­ing pro­ject eco­nomics.’

The dif­fi­culty is align­ing short-term volatil­ity in com­mod­ity mar­kets with long-term in­vest­ment com­mit­ments. Bailie reck­ons the em­pha­sis will be on ‘risk mit­i­ga­tion be­fore fur­ther in­vest­ment’, mak­ing it eas­ier to align the roll out of the pro­ject with the ‘dy­namic and fluc­tu­at­ing ex­ter­nal en­vi­ron­ment’.

Stages

The Wafi–golpu Joint Ven­ture is equally owned by sub­sidiaries of Newcrest Min­ing and Har­mony Gold. The first pro­duc­tion will be tar­geted from Block­ade 1, which is lo­cated 980 me­tres be­low the sur­face. This is ex­pected to en­able the ex­trac­tion of eight mil­lion tonnes of ore over a four-year pe­riod at a peak an­nu­alised pro­duc­tion rate of three mil­lion tonnes per an­num. The aim will be to mine the

THE PRO­JECT WILL BE ROLLED OUT IN A NUM­BER OF STEPS TO HELP MAN­AGE THE RISK. Bryan Bailie

high grade ore body first to gen­er­ate cash flow to sup­port the con­struc­tion of Block­ade 2.

‘Block­ade 1’s pro­duc­tion is an­tic­i­pated to oc­cur in the 60th month and Block­ade 2’s pro­duc­tion will be achieved in month 85. Min­ing of Block­ade 1, how­ever, is lim­ited to the du­ra­tion it will take to bring Block­ade 2 into pro­duc­tion.’

Block­ade 2 is lo­cated a fur­ther 680 me­tres be­low Block­ade 1, ac­cord­ing to Bailie. ‘This will ex­tract 141 mil­lion tonnes of ore over a three to four year pe­riod at a peak an­nu­alised pro­duc­tion rate of six mil­lion tonnes per an­num. This is a big ore body.’

In­fras­truc­ture chal­lenges

Bailie said the com­pany is look­ing at ‘mul­ti­ple ter­res­trial tail­ings fa­cil­ity op­tions’ and also ma­rine op­tions.

‘PNG presents a chal­leng­ing en­vi­ron­ment in the de­sign and op­er­a­tion of ter­res­trial tail­ings stor­age fa­cil­i­ties, pri­mar­ily due to moun­tain­ous ter­rain, the high rain­fall, poor con­di­tions for con­tain­ment bores, and lim­ited avail­abil­ity of land due to the to­pog­ra­phy, the en­vi­ron­ment and so­cial her­itage con­cerns.’

The pro­ject will re­quire re­li­able, low cost bulk power sup­ply, sta­ble low out­age, an elec­tric­ity trans­mis­sion sys­tem and new ac­cess roads from the High­lands High­way to the mine site bound­ary, Bailie claims.

He has also called for the Lae Air­port to be up­dated to in­ter­na­tional sta­tus and for im­prove­ments to be made to the ma­rine port fa­cil­ity for the ship­ping of con­cen­trate. ‘Much of the ex­ist­ing Lae in­fras­truc­ture, par­tic­u­larly hospi­tals, ed­u­ca­tional fa­cil­i­ties, hous­ing and roads will have to be sub­stan­tially up­graded to sup­port a long-du­ra­tion mine. Bailie de­scribed the in­ter­na­tional con­text as a ‘very chal­leng­ing eco­nomic en­vi­ron­ment’ be­cause of slow­ing de­mand for global me­tals, de­pressed com­mod­ity prices and weak­en­ing in­vestor de­mand for large-scale min­ing projects. ‘Pro­ject suc­cess in such an en­vi­ron­ment is highly de­pen­dent on reg­u­la­tory and fis­cal sta­bil­ity, sus­tained gov­ern­ment and landowner com­mu­nity sup­port, and the timely grant­ing of our per­mits.’

The Wafi-golpu mine site.

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