O'Neill backs emerging copper-gold projects

PRIME Minister Peter O’Neill is counting on government revenue from Newcrest Mining and Harmony Gold’s Wafi-Golpu project, Marengo Mining’s Yandera project and the Xstrata-led Frieda River project by 2016 to help fund free education in Papua New Guinea.
O'Neill backs emerging copper-gold projects O'Neill backs emerging copper-gold projects O'Neill backs emerging copper-gold projects O'Neill backs emerging copper-gold projects O'Neill backs emerging copper-gold projects

The PM recently toured PNG's Simbu (Chimbu) province, where he announced 59 million kina ($A26.33 million) would be spent for infrastructure projects.

As part of a speech countering criticism of the government's free education agenda, O'Neill said first PNG LNG project revenues in 2014 would help pay for school fees.

"By 2016, we expect our budget to be three times bigger due to the monies coming into the country, not only from our LNG but other major projects including the proceeds from the Wafi gold [and copper] mine in Morobe, Yandera in Madang and Frieda mine in Sepik," O'Neill said.

"We created the Sovereign Wealth Fund to manage this money.

"After every three months, we will publicly announce how much money is in the SWF account.

"We will then use these funds to pay for school fees for students who are attending our universities. By then, the entire education system in the country will be free."

While O'Neill backs the existing mining regulatory regime, there is support among members of the coalition behind him to transfer government ownership of resources to customary landowner groups.

The PNG Chamber of Mines and Petroleum warned that such changes could create economic chaos in the country.

Project status

The Yandera project is 95km southwest of the provincial capital of Madang and is initially expected to produce 100,000 tonnes of contained copper plus 15,000t of contained molybdenum a year over a 20-year life but there is scope for considerable expansion.

Mining approvals are expected in the September quarter of 2013, construction is tipped to start 24 months later and the project is targeting production in 2016.

The prefeasibility study for the mammoth Wafi-Golpu project, which remains under considerable exploration, is expected to be complete midyear while a feasibility study is slated for completion in 2014.

The Frieda River PFS, completed in 2010, estimated capital expenditure costs of $US5.3 billion for a 20-year mine life.

The open cut project is targeting 930,000 tonnes per annum of concentrate containing 246,000t copper and 379,000 ounces of gold in the first eight years of its life at C1 cash operating costs of 43c per pound or $1.12/lb without gold credits.

Xstrata assumed control of the project in January 2007 and must complete the feasibility study, due on December 21, to maintain its 81.82% interest.

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