Harmony touch points to PNG's golden future

AS A company that's listed in Johannesburg, Harmony Gold has not been getting much public, or media, attention in Papua New Guinea. But that is about to change in a big way. By Brian Gomez

From an almost innocuous entry in February 2003 when it took over the Australian Stock Exchange-listed Abelle Ltd, which was then working on development of PNG's Hidden Valley silver-gold deposit, Harmony has been making big headway.

Hidden Valley should begin production of silver and gold in November next year after a development costing some $US278 million, producing the equivalent of 285,000 ounces annually.

Harmony has obtained a $US31 million facility from Westpac PNG for the purchase of its mining fleet, and the company says that it expects non-citizen employment at the mine to be less than 5% within four years.

It has signed a contract with the government utility PNG Power for supply of hydropower from the Yonki Dam commencing in January 2009, but will also own diesel generators capable of providing 100% back-up.

Since its entry, Harmony has become very enthusiastic about PNG's minerals potential and the prospectivity within the three areas it is exploring – Morobe-Hidden Valley (1226 square kilometres), Wafi Golpu (960sq.km) and Morobe Coast (2069sq.km).

This enthusiasm is expressed quite simply on Harmony's website, which states: "The mineral prospectivity of PNG is considered among the highest in the world and Harmony's landholding is one of the best in PNG."

To back up this view Harmony has six exploration teams working out of six camps with pre-feasibility studies underway on the Wafi gold deposit and the adjoining Golpu porphyry copper-gold deposit.

The most recent upgrade in February showed that Golpu contains 163 million tonnes averaging 1.1% copper, 0.6 grams per tonne gold and 132 parts per million molybdenum for contained copper totalling 3.9 billion pounds, 2.96 million ounces of gold and 47 million pounds of molybdenum.

Contained gold at Wafi amounts to 6.52Moz.

The company has also outlined a 1sq.km geochemical anomaly, Biamena, where trenching at Moa Creek has yielded 35m at 3.3gpt gold. There is optimism this may develop into a new ore body, only 10km south of Wafi.

It is understood Harmony has held some preliminary discussions with Korean and Japanese copper smelters on the possibility of jointly developing Golpu, where a decline is expected to be built in the first quarter of next year for further testing of the ore body.

It is possible Wafi could be developed into a new gold mine by the end of the decade, with Golpu coming onstream possibly two or three years later.

This would make Harmony a major force in gold mining in Papua New Guinea, possibly with production of around 1Moz annually from its three core projects.

On present indications Lihir Gold will by then be producing more than 1Moz annually from its lone ore body, while Barrick's Porgera could be producing around 600,000oz a year.

Unless new reserves are proven up, the big Ok Tedi copper-gold project would be in shut down mode at this stage.

Around the time Golpu is likely to be brought into production, another medium-scale copper-gold deposit could also be developed by Frontier Resources at Kodu, near Port Moresby.

Clearly PNG will remain a major force in global gold production in the coming decade as traditional gold producing nations such as South Africa, Australia and the United States continue to lower their profiles.


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