A multi-generational mine
The Wafi–golpu gold and copper project could be one of PNG’S largest ever.
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.
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’.
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.’
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.