Frieda River remains shrouded in "mists of time"

DOESN'T it seem like the ultimate irony? The enormous Frieda River copper-gold deposit discovered decades ago has grown into one of the world's biggest undeveloped copper prospects but potential development is still mired in the mists of time. By Brian Gomez

In the last few years, landowners and politicians from PNG's Sandaun province, which borders Indonesia's West Papua, have regularly raised concerns over the time it is taking to develop Frieda.

No definitive answers have been coming either from the project owners or government officials.

Sandaun is one of PNG's poorest provinces and landowners are eager for royalties that could flow from Frieda.

Frieda contains indicated and inferred resources totalling 1.28 billion tonnes at an average grade of 0.48% copper and 0.3 gram per tonne gold.

Over the past year, there has been tremendous amount of public interest generated over possible reopening of the Bougainville copper mine and yet Frieda actually has a significantly larger resource.

Contained copper at Frieda is about 260% larger at 7.6 million tonnes, while contained gold is more than 14 million ounces versus 10.7Moz remaining at the Panguna mine.

Of course development costs, still amounting to a cool $US1 billion at least, would be significantly lower in Bougainville since the ore body is exposed at the bottom of the old mine pit.

But reopening of the mine is likely to be a long-drawn affair since the Autonomous Bougainville Government still cannot guarantee access to the Panguna minesite even to Bougainvilleans who do not reside there.

Following the footsteps and takeover trail of other previous explorers such as Cyprus Amax, Noranda and Falconbridge, global Swiss-headquartered Xstrata took over operatorship of Frieda River in January.

Despite decades of exploration activity and studies on process options in recent years, Xstrata's deal with Highlands Pacific only requires it to "commission and arrange" a bankable feasibility study by January 23, 2012.

Well before this happens, Toronto-listed Nautilus Minerals should be producing 140,000t of copper and more than 300,000oz of gold annually from the ocean depths in PNG waters, making it a world first.

It is also possible that either Frontier Resources or Marengo Mining, or both companies, could also be well on the way to becoming copper producers at their respective Kodu and Yandera deposits.

Xstrata recently also exercised an option over the huge Tampakan copper deposit in the Philippines, originally discovered by Western Mining.

It is also evaluating other big copper projects in Peru, Chile and Argentina so the remote location of Frieda and relative lack of infrastructure could push the latter down its development pecking order.

In exercising its PNG option, Xstrata did not make a decision on the high-grade Nena deposit also located at Frieda, where there is 71.8Mt of ore grading an excellent 2% copper and 0.5gpt gold plus 18Mt averaging 0.1% copper and 1.4gpt gold.

To exercise the option over Nena, Xstrata would have had to pay Highlands Pacific $10.8 million.

It would certainly be very interesting, given the ongoing problems Highlands Pacific is facing at its Kainantu gold project in Eastern Highlands, if another international corporate player offered to purchase Nena with a view to fast-tracking its development.

After all, copper prices are expected to remain strong at least for another two years and most analysts are anticipating further upside on the gold price.


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