‘Robust investment case’ for Papua New Guinea’s Wafi-Golpu gold project, say venture partners


The latest feasibility study for Papua New Guinea’s proposed Wafi-Golpu copper and gold project confirms ‘a robust investment case—one which supports proceeding with the project’, say Newcrest Mining and Harmony Gold.


Site of the Wafi-Golpu mine project. Credit: Morobe Mining Joint Ventures

The latest feasibility study for Stage 1 of the project (and the pre-feasibility study for Stage 2) show it is ‘a world-class copper-gold resource, due to its large-scale, high grade, long-life with low operating costs’, according to statements by Newcrest and Harmony.

The proposed gold and copper Wafi-Golpu project will cost US$2.6 billion (K7.9 billion) to build, providing an internal yield of 16 per cent, they report.

The updated ore reserve estimates the project contains 11 million ounces of gold and 4.8 million tonnes of copper.

The companies say they are continuing to work with the Papua New Guinea government to finalise a pre-mine development agreement.

The life of Stage 1 is expected to be 28 years, according to Harmony’s CEO, Peter Steenkamp. Earthworks are expected to start shortly after the agreement is signed with the PNG government and production is expected to commence in 2020–21.

‘Everyone’s trying to weaken their currency, and in such an environment gold should be in demand as a safe haven.’

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Harmony says the net present value of the first stage has been put at US$1.1 billion (K3.35 billion), assuming a copper price of US$3 per pound (K9.1) and a gold price of US$1200 per ounce (K3,649).

Golpu currently does not have the infrastructure to support mining operations. Among the major infrastructure requirements are: access roads, a processing plant, a tailings storage facility and an export pipeline for the concentrate. Also required are associated de-watering and loading facilities at the Lae Tidal Basin, an accommodation camp and a power transmission line.

Gold prices up

Local gold price, 2012 to 2016, showing recent rally in price. Source: goldprice.org

Global gold price, 2012 to 2016, showing the recent rally in price. Source: goldprice.org

The price of gold rose to its highest level in a year in mid-February, peaking at US$1260.60 an ounce (K3,831). This reflects turmoil on the stock markets, according to analysts.

‘Rate hikes by the Fed (US Federal Reserve) are being priced out, while on the other side, the European Central Bank (ECB) will probably announce more quantitative easing in early March,’ said Frankfurt-based Commerzbank analyst Daniel Briesemann. ‘Everyone’s trying to weaken their currency, and in such an environment, gold should be in demand as a safe haven.’

About the Wafi-Golpu Project

  • Tenement estimated to contain 11 million ounces of gold and 4.8 million tonnes of copper;
  • The deposit is located 60km south-west of Lae in the Morobe Province;
  • Newcrest and Harmony Gold each currently own 50% of Wafi-Golpu through Morobe Mining Joint Ventures;
  • The PNG Government retains the right to purchase up to a 30 per cent equity interest before mining starts;
  • Harmony says Golpu will add about 500,000 ounces (45 per cent) to its annual production;
  • The ‘Block caving’ method will extract the ore, whereby a large section of rock is undercut, creating an artificial cavern that fills with its own rubble as it collapses. It is regarded as cheaper and safer than other methods.

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