Ramu ramps up

THE Ramu nickel-cobalt project in Papua New Guinea is continuing to ramp up to full production with an average production rate of 77% of nameplate rate achieved for the September quarter.
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Highlands Pacific said the Kurumbukari mine, Basamuk treatment plant and the 135 kilometre slurry pipeline to the treatment plant were ramping up with all major operating elements of the treatment plant working as designed.

The plant had achieved an average nameplate capacity for September quarter just under its planned rate of 80%.

The company's September quarterly report confirmed a continued improvement on the 52% achieved during the March quarter and 68% achieved during the June quarter.

Operator and majority owner Hong Kong and Shanghai-listed Metallurgical Corporation of China is continuing to forecast 70% of name plate capacity for the 2014 year before reaching full production of 31,150 tonnes of nickel in 2015.

Sales contracts are in place for the full 2014 and 2015 forecast production with Chinese and international buyers.

And the mid-range forecasts for the London Metal Exchange nickel price remain positive with deficits forecast for years 2015 to 2017.

Also during the quarter the Frieda River feasibility study development concept was released, detailing a $US1.7 billion capital cost estimate excluding mining fleet and power station, life-of-mine mill feed of 600 million tonnes with an average processing rate of 30Mtpa over a 20-year mine life.

It is anticipated the mine will produce 125,000 tonne per annum copper and 200,000 ounce pa gold in concentrate at a cash cost of $US1.30-1.40 per pound copper, assuming a $1300/oz gold price.

Highlands anticipates the Frieda River feasibility study will be completed and application for a special mining license lodged before November next year.

Higher production is anticipated in the first five years with processing rates expected to be 20% higher than the 30 million tonne pa life-of-mine average.

Costs have been worked up from scaled 2012 feasibility study data and from PanAust's scaled Phu Kham actual data with key cost inputs verified with Ok Tedi Mining.

PanAust acquired an 80% interest in Frieda River with Highlands holding the remaining 20% under the $US125 million ($A135 million) sale agreement struck with Glencore Xstrata in August.

The company is also on the verge of finalising joint venture discussions for the next stage of exploration at the Star Mountains project elsewhere in PNG.

The company's September quarterly report said the project remained on a care and maintenance basis, however discussions with potential JV partners for the next stage of exploration programmes were continuing.

Highlands has four copper-gold-porphyry licences covering 515 square kilometres, located some 25km from the giant Ok Tedi mine.

Of 17 identified copper-gold targets, six have been preliminarily drilled with the majority intersecting copper-gold mineralisation.

"The completion of the Glencore-PanAust transaction is great news and paves the way for PanAust to complete the feasibility study for their development concept," Highlands Pacific managing director John Gooding said.

"There are a number of further opportunities to be explored in their development concept but already the project is showing robust economics at consensus commodity pricing," he said.

"The continued improvement in production at Ramu is pleasing and we are now assessing our nomination into the project early next year depending on continued production performance, nickel price and final year audited accounts.

"These operating surpluses will be used to pay our capped share of development costs with the remainder flowing through to us. We hope to be able to give further guidance on this early in the New Year."

He added: "In relation to Star Mountains we had hoped to have finalised joint venture discussions during the September quarter and while this did not occur we remain confident that finalisation is not far away."

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