Frieda River tension

HIGHLANDS Pacific would “welcome” a takeover of the Frieda River copper-gold project by the Papua New Guinea government as its relationship with project operator Glencore Xstrata gets more frosty.
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Over a year ago and before the merger with commodity-trading giant Glencore, Xstrata Copper signalled it would possibly sell its 81.82% stake of Frieda River and this divestment process remains underway.

Highlands expressed some frustration over it yesterday.

"At this stage, Highlands is unaware of the likely outcome and timeframe for conclusion of this process; however we note the recent media articles in PNG that the PNG Government is interested in taking over the project and we would welcome this development," Highlands said in its June quarter report.

"Highlands does have a pre-emptive right over the interest."

While the ability of the budget-busting PNG government to manage and fund development of the remote $US5.3 billion project is questionable, 18.18% stakeholder Highlands also provided some signs of potential joint venture squabbling ahead.

"Highlands is of the opinion the work undertaken prior to and during 2012 by Glencore Xstrata does not comply fully with the obligations set out in the joint venture deed of variation agreement, which entitles Glencore Xstrata to an additional 9.82% interest in the joint venture to lift its share to 81.82%," the explorer said.

"Glencore Xstrata believes it has met its study obligations."

Over to the Ramu nickel cobalt mine in PNG, Highlands revealed this mine was operating at just more than 30% of its nameplate capacity of 31,150 tonnes per annum nickel and 3300tpa cobalt.

Highlands, which owns 8.56% of the wet nickel laterite mine, said the most recent advice from the Chinese operator was that 50% of capacity would be achieved this calendar year while full capacity would be reached in 2015.


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