Reuters reported that an increase in the estimated copper and gold reserves at a Papua New Guinea mine could boost the country's income by some USD 1 billion per year over the next quarter century if the government moves to acquire a stake in the project.
Australia's Newcrest Mining, which jointly owns the Golpu mine in Morobe Province with Johannesburg based Harmony Gold said that new exploration work pointed to revised reserves estimates of 5.4 million tonnes of copper and 12.4 million ounces of gold. This is an increase of 4.7 million tonnes of copper and 11 million ounces of gold compared with previous estimates provided by the companies.
The mine could start producing by 2019, pending results of more studies and various approvals. The firm will also conduct a study later this year into a neighboring deposit called Wafi. Papua New Guinea holds the rights to buy up to 30% of any mineral discovery at Wafi and Golpu.
The CEO of Harmony Gold, the world's fifth largest gold producer, said last week the government had signalled its intent to take up the stake if it is able to pay for it. If the government chooses to take the whole stake, the interests of Newcrest and Harmony would each drop to 35 percent and the cost of development would be split three ways. Newcrest estimates the mine would cost USD 4.8 billion to develop but said the figure was preliminary give current weaker conditions.
The company said that the mine is estimated to have a life of 26 years with annual production of up to 550,000 ounces of gold and 330,000 tonnes of copper. At today's metals prices, the metals could fetch roughly USD 3 billion in total.
Papua New Guinea's leaders have long sought ways to reclaim the country's role as a world supplier of copper to sustain economic growth and ease concerns of political instability. But the government's goals are likely to be crimped as major miners are under pressure to conserve capital amid uncertainty over global growth rising costs and falling commodity prices.
Miners are also concerned that the Papua New Guinea government may be make major changes to mine ownership rules with a move to local communities, a policy switch being driven by the mines minister Byron Chan.
Source - Reuters
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