Frieda River ‘one of largest’ undeveloped copper-gold deposits in world, says PanAust

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PanAust has released its feasibility study into the Frieda River mine in Sandaun Province, claiming it is ‘one of the largest undeveloped copper-gold deposits in the world’, with an initial 17-year mine life. The company’s intention is to take a staged approach to development.

Frieda River project. Credit: Xstrata Copper

The Frieda River project in Sandaun Province. Credit: Xstrata Copper

The feasibility study found that there are over 2.7 billion tonnes of mineralisation at an average grade of 0.42 per cent of copper and 0.23 grams per tonne of gold. The study is projecting average annual production of 175,000 tonnes of copper concentrate and 250,000 ounces of gold.

‘We recognize that a large part of this project is all about waste and water management.’

The direct cash cost of copper production, including transportation and freight, treatment and refining charges and marketing costs, is projected to be US$0.69 per pound. Copper is currently trading at US$2.10 per pound.

US$3.6 billion investment

According to PanAust, it will place the mine ‘within the first quartile of the global copper cost curve once hydroelectric power is introduced.’

The feasibility study estimates the cost of the development of the project to be US$3.6 billion. The payback period for that investment is estimated to be six years from the start of production. A further US$2.3 billion is to be invested over the life of the mine.

PanAust expects to submit an application for a Special Mining Lease covering the project by June 30. PanAust owns an 80% interest in the project, with the remaining 20% held by Highlands Pacific.

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Challenges

PanAust's Glen Connell Source: Business Advantage International

PanAust’s Glen Connell Source: Business Advantage International

Glen Connell, General Manager, Government and Community, for PanAust told the Australia Papua New Guinea Business Forum in Cairns earlier this week, that there are significant environmental and logistical challenges.

‘We recognise that a large part of this project is all about waste and water management,’ he said.

‘The integrated storage facility solution that we are investigating, and will compose, will house waste rock and tailings. And then, after year five of production, it will produce hydro-electricity—probably about 60 per cent of the project’s needs after that time.

‘That integrated storage facility sits at the end of the valley in which we are operating, so sediment waste water run off will all go into that facility. It really is the centre piece of our environmental management strategy.

‘It is a very big deposit with many years of production. But in order to get to that point you need to start small.’

‘A new airport will be developed and we are hoping there might be some commercial application for that, which will help the local communities and the economy of the region.’

Sepik River

Once the mine is operating, Connell said, 4,000 tonne barges will travel up the Sepik River ‘probably one every two days or one every one-and-a-half days.’ He claimed it will be the mine’s main impact on the river, because its integrated storage facility will hold all the sediment.

‘The basic philosophy we have taken to this is to think big. It is a very big deposit with many years of production. But in order to get to that point you need to start small.’

Connell said the project is as much a logistics project as a mining project, pointing out that it is not near a port, the coast or a power source.

‘There is mining, processing, power supply, power generation and transmission and non-processing infrastructure.’

It is also exposed to commodity price fluctuations. Connell noted that the copper price had fallen by 35 per cent since the company acquired its interest from Glencore Xstrata in August 2014.

‘We are talking decades here, so we are taking a very long-term view,’ said Connell, adding that the mine ‘could go for 30-plus years.’

Several projects

Because of the scale of the operation, the challenge is multifaceted, said Connell. ‘There is mining, processing, power supply, power generation and transmission and non-processing infrastructure. And there is a quite complex logistics chain.

‘It will very much be several projects being managed, only two of which relate to the actual mining and processing of the mineral resource.’

‘This is one of the biggest undeveloped copper projects in the world’

Connell said the mine could be a ‘game changer in terms of the socio-economic development’ of the provinces of Sandaun and East Sepik. ‘It has the potential to open up the region to new economic opportunities,’ he said.

The development of the mine will have to be undertaken without significant road infrastructure, although Frank Kramer, Chairman of Kumul Petroleum, told the Forum that developing a connecting highway for the Frieda River project should be a ‘national development project.’

Caution

Connell said the company has already made a significant commitment of resources. ‘At last count we were approaching 240,000 man hours and in excess of $60 million invested in further work.’

With construction set to take around six years, he was cautious about time lines, however:

‘When will we put the first shovel in the ground? The answer is: “I don’t know.”’

The project’s joint venture partner, Highlands Pacific, has welcomed the release of the study.

‘This is one of the biggest undeveloped copper projects in the world, and this study represents an important step in the process towards developing the project profitably and in the interests of all stakeholders,’ said Highlands Pacific’s Managing Director John Gooding in a statement.

Comments

  1. Albert>Maru says

    Good news however land issues will also be a hindrance to any mine activities operating in PNG. Not all land in PNG doesn’t have an ownership or ownership interest. Capturing such in the assessment will be a bonus to the mine. Any mine activities in the long run can eventually have a mine related damage to the forests habitation, community as a whole and the water ways and then would see disgruntle owners fronting up at the site. PNG is full of expectations. So for the best interest and success of the mine, being prepared for unforseen circumstances, take a look at other mines in PNG and eventually saving cost which will be profitable as said, in the long run.

  2. Excellent news. PNG government should acquire the 30% stake in Frieda River project so PNG don’t miss out again like PANGUNA, PORGERA, LIHIR & others. This is an opportunity because as clearly stated in the report, Frieda will be among the top 10 in the world and you imagine the benefit that will come with it…

  3. Martin Torovi says

    Congratulations PanAust & highlands, it’s taken a life span from discovery and exploration through to development. Building a mine such as Frieda, given the global commodity economics in a challenging environmental setting is highly commendable. It is pleasing to see Glen Connell at the helm, placing water and waste management as priority challenges.
    TSF positioning, locked in by topographic highs appears reasonably safe, despite its upstream locality in the headwaters of Frieda and Sepik Rivers. Hopefully, “hopefully” no technical failures or spillover occurs during life of mine and post closure.
    Furthermore, other challenges include waste rock management, sulphide oxidation and metal leaching, plus heavy metal liberation and transport as suspended fine solids. It is obvious the mine developer would’ve captured this aspects in the mine feasibility plans. The mines sulphide geochemistry and is potential oxidation reactivity in transported fine sediments could be an unknown, or maybe tests have been completed. These need to be communicated to the communities in the company’s continuous stakeholder consultation /engagement programs.
    The Sepik River waterway is home to a dense cluster of villages and communities, whose livelihood culture and heritage for generations have thrived on the Rivers existance. It is pleasing to see the developers acknowledge this aspect. As I take it, “best standard practice” control management system and operations s will be put in place, followed by a continuous improvement strategy in its operating systems, promoting responsible mining practices, environmental monitoring, impact assessments and management, ensuring minor controllable issues do not turn to irreversible impacts.
    As a middle Sepik river citizen and a geologist, I salute the mine developers for taking the bull (Geological, Engineering,Environmental, Social and Economical Challenge) by the horns. Well done, Glen and team. The challenge now rests on everyone, community, provincial governments and national government regulatory departments towork together with the developer, deal with issues and reap the benefits in a sustainable nature.

  4. Gordon Wallangas says

    The least any communities in the project area envisage is exploitation and environmental disaster. To-date many mines have been opened and managed in PNG and numerous bad experiences due to poor planning and development of mines in one of the most difficult social, economic, political and physical environment in the world are available that PANAust can use for its decision and planning. Hence, there should not be any excuses for not doing the right or best thing for Frieda River Copper and Gold mine.
    However, having read the above brief report presented by Glen, General Manager of PANAust, its encouraging to know that the contractor is thinking out of the box and strategically phasing and doing everything possible, to make Frieda mine planning & development a bench mark for others to follow in the future.

  5. A lot of risk and reward for this project. In my mind the dam will be critical. I really hope a lot of investigation and modelling has been done surrounding the dam. It certainly sounds like a lot of consideration has been given to avoid the failures others have had with dams and rivers. I hope changing weather patterns has been given some serious consideration.

  6. I hope the feasibility study includes budget and planning for local community development.

    By this I mean planning and supporting medical facilities to help keep the local work force and their families well. Education and training for technical and local economics can be rewarding all round. Include support for social welfare such as sporting venues and religious to help support healthy development and activities outside of work time. Education of local employees, their families and fellow community members in financial matters should be important for the long term health of the community and the mine. Training of local people to be contractors and business operators can be a real win win for everyone.

    Plan it all and then ensure the plan is carried out to agreed schedules and you can all grow together and avoid where so many others have run into trouble.

  7. Luke Tapas says

    PNG economy needs it so does ordinary citizens. Developers just need to convince PNG and most importantly the “to-be-impacted” communities that they will take on the approach of the best performer in the world, may be on this.

  8. Stanley Avarui says

    Suggest: Trap all sediment in a valley.
    Agree with Frank Kramer.
    Waiting to see the first shovel put in to the ground.
    Looking forward to work with PanAust in my own province.

  9. Ramphaey says

    Agreed. Using the Sepik River will cause environmental damage like that evident in the Fly River. Only sickness and death of river life occurs. The livelihood of the people will be gone. What community development plans do you propose?

  10. Carolyn Yohang says

    How has previous and current miining operations in PNG translated into imprving the health and well-being of the PNG’s rural majority and urban poor population and will Frieda River mine do this time around? Lifestyle diseases have crept into rural areas unlike before in colonial days and preventable diseases are still a huge burden on PNG’s health systems with limited resources so to speak. There also is the need for a feasible epidemiological study on the socio-economic determinants on the health and well-being for Papua New Guineans as Frieda mine will go into full swing.

    • I agree with the idea of having Frida mine in my province , but we have to think about what would be life like ? are we going to have an happy life with out a social problem , is this mine going to change all of east sepik ? If that so , then is it a everlasting project that will be so benefit ail for the coming generation.
      This is my short reflective questions to think about it.

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