More than a mine

Plans for the Frieda River gold and copper mine have become more ambitious

Establishing a gold and copper mine in Frieda River in Western Province was always going to be a daunting prospect given the area’s remoteness and lack of infrastructure.

The solution? Turn it into a large scale development project that involves much more than mining. That is the plan of the Frieda River Joint Venture company, which was initially a joint venture between Frieda River Limited, a Panaust subsidiary company, and Highlands Frieda Limited, a subsidiary company of Highlands Pacific. (Highlands Pacific was acquired by Cobalt 27 Capital Corp in January 2019.)

The project has been renamed the Sepik Development Project. It will require an estimated initial capital investment of US$8 billion (K26.5 billion). That would make it the second largest investment in Papua New Guinea, after the PNG LNG project.

There is a projected mine life of 33 years (revised up in 2018 from 17 years), and a pathway to extend this to 45 years with average annual production rates of 175,000 tonnes of copper and 230,000 ounces of gold.

That is just the mine. The aim is to establish a hydroelectric power facility with a generation capacity of up to 490 MW to supply both the mine and external customers. The installation of a regional power transmission line from the hydroelectric facility is also planned.

There will be a major investment in infrastructure, including an upgrade and expansion of the port of Vanimo, an upgrade of a 188 kilometre road south from the port of Vanimo on the northern coast of PNG to Green River, and construction of a further 221 km road from Green River to Telefomin, including a 350m bridge over the Sepik River.

This will enable access to the mine site and the hydropower station.

Critical enabling infrastructure (an upgrade of the port of Vanimo and a public road from the port to Hotmin) is estimated to cost US$500 million (K1.7 billion) and will be funded by third-parties and shared with other users in the region.

The project is expected to provide employment for approximately 5000 people during construction and 2100 personnel during operations. It is expected to create 30,000 indirect employment opportunities.

Peter Trout, Executive General Manager Technical Support and Studies for Panaust describes it as a ‘complex undertaking by virtue of the various dependencies.’

The project is structured to attract funding from equity investors, financiers and export credit agencies, according to Panaust.

Total tax, royalty and production levy revenue to the state and landowners is estimated to be K29 billion. 

THERE WILL BE A MAJOR INVESTMENT IN INFRASTRUCTURE.

Credit: Panaust The proposed Sepik Development Project.