Published in the April 2011 PNG Report magazine

It was a move to the Toronto Stock Exchange in 2008 that Marengo Mining managing director and chief executive officer Les Emery credits for the company's significant progress.

Marengo attracted little interest during its initial public offering on the Australian Securities Exchange in 2003.

Emery had hoped the 2005 acquisition of what became its flagship project, Yandera in Papua New Guinea, would raise the company's ASX profile. However, it largely went unnoticed.

"In 2005 when we entered into the deal and into 2006 we got very little traction from the ASX or the Australian market - institutions weren't that interested in us," Emery said. "Part of the problem is there aren't that many copper-molybdenum porphyry systems exploited in Australia, so the market is somewhat unknown to them."

Marengo began looking to other markets to raise equity and decided the TSX was its best option, listing in April 2008.

"The move to the TSX, we wouldn't be where we are today without it," Emery said.

"Since that date we have raised around $120 million and predominately it has come out of the North American and European market though the TSX."

Despite Marengo holding Yandera for just five years it is by no means a new project. The area was first explored in the 1970s by BHP, which conducted about 30,000 metres of diamond drilling on the tenement.

Even with positive assays, the company moved on and the project has exchanged hands several times but remained largely dormant.

"What attracted us firstly was the substantial copper-molybdenum porphyry at the Yandera central

itself, and it had good potential along the structure for repetition, so we built up a substantial ground holding and since that day have focused totally on Yandera," Emery said.

Even though it was not a JORC-compliant resource when Marengo acquired the project, Emery was confident of growing the holding.

Close to 100,000m of diamond drilling has been completed on the site to date.

The size of the project will depend on the definitive feasibility study, to be released in the first quarter of this year.

However, the initial start-up size of the project is expected to produce 100,000 tonnes of contained copper plus 15,000t of contained molybdenum a year over a 20-year life.

"There is a substantial resource beyond the current pit design," Emery said.

"We have got extensional drilling going on and also depth drilling going on at the moment, so I think that 20 years is probably the start of a longer life again - I refer to it as 20 years going on 40."

Emery was quick to sing the country's praises, saying PNG was more than welcoming to the mining sector.

"PNG is a great place to operate," he said. "People are worried about sovereign risk, but then you get places like Australia that whack in a resource tax.

"You wouldn't find that happening in PNG because about 80 per cent of its foreign earnings are related to the resource industry - minerals, oil and gas. So they are much more pro-mining than Australia is."

The biggest challenge in the company's short history, according to Emery, has been holding onto ownership of the project.

"Being able to arrange funding for the ongoing feasibility study and prefeasibility work - some juniors give up on the way through and hand it over to a major and then the timeline is under their control," he said.

Crucial to Marengo's bid in retaining ownership of Yandera was a unique memorandum of understanding signed with China Nonferrous Metal Industry's Foreign Engineering and Construction Co in October.

Under the deal NFC will arrange 70% of the estimated $1.6 billion development costs as well as provide a fixed price lump sum turnkey development for the project.

"We were looking for an arrangement or a deal that didn't entail handing over control of the project, and this deal we believe is the first of its kind in the world where we are not selling the project," Emery said.

"For us as a smaller company developing a major resource it means that a lot of the risk is taken out of potential cost over-runs or escalation due to construction costs, so that's the real benefit for us.

"We borrow Chinese money to buy Chinese goods and services, so from the Chinese economy point of view it's a great win-win deal."

In addition to NFC receiving the contracts to build the project, the state-owned, partly privatised company also will have an offtake agreement for the copper concentrate, which Emery said was still to be negotiated.

Initially Marengo had been working on the basis the project would be designed and constructed

by western contractors; however, the MoU with NFC was simply too good to pass up.

Using Chinese Yuan also will mean significant savings on the predicted capital expenditure - an additional benefit of the agreement.

Design and construction of the mine is expected to begin in quarter three this year with commissioning of the mine in Q4 2013.

Emery is not concerned about missing the boat on current record high copper prices, which have risen more than 400% since Marengo acquired Yandera in 2005.

"If you find a copper porphyry system today, it's probably 10 years before you would even get anywhere near a development decision," he said.

"We were fortunate that a lot of that work had been done before, so we picked up something that was sort of like a half-built house and we have had to complete it.

"Asia is well under the western world in copper consumption per head and that will only increase as more and more people become westernised in terms of access to motors vehicles, technology and everything else.

"It's hard to see copper demand dropping."