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World-class gold-copper deposit makeover

Newcrest and Harmony have gone back to the drawing board on Wafi-Golpu. Results come Monday.

Monday could be a day of redemption for Newcrest and Harmony Gold. The two gold miners are to deliver a second-pass prefeasibility study on the Wafi-Golpu project in Papua New Guina.

This isn’t just any old PFS makeover on any old orebody. Wafi-Golpu stands as one of the most important undeveloped gold-copper deposits in the world. It’s a mammoth standing at 1 billion tonnes @ 0.76 g/t Au and 0.77% copper. And it’s been a gargantuan disappointment – so far.

Back in 2012 Harmony and Newcrest (50/50 JV partners, but the PNG government can buy-in to 30%) revealed one of those now much derided mega-mine plans that, once the price of gold tanked (and after gold miner profits disappointed) the market decided was a dud – too much money, too much risk, too long a payback.

Newcrest and Harmony designed a $4.8 billion project (initial capital) to build a massive block cave copper-gold mine that would produce 400,000 ounces gold and 250,000 tonnes copper a year, on average, during the first 15 years of production. Ore would come from a deposit that had quickly grown big – and deep – with expansion drilling in the lead up to that ill-fated PFS.

The orebody about tripled in size between 2009 and 2012. It showed stout legs. It expanded from 800 metres depth to 1,700 metres depth, and 300 metres in length to 800 metres.

That expansion put it in the realm of the top 10 undeveloped gold deposits world wide.

But the $4.8 billion price tag, with an 8.4% post-tax IRR, on a technically challenging project (PNG, remote, infrastructure issues, etc.) was a tough sell. So Harmony and Newcrest, as they and most other major miners have done, got existential about their portfolio. For Wafi-Golpu they decided to take a second look at the it – this time as something smaller, a vision that is in vogue.

The results, in an update PFS are to come out Monday.

But not all PFS remakes are created equal. This stands as one of the more exciting ones given the deposit this potential mine is being configured around. The gold mining duo say their plan will be scalable to minimize up front costs. They’ve issued few details beyond. But no doubt they’ve scratched their heads to figure out how to access the nearer surface, higher grade zones first. 

This is a deposit that has yielded some awesome intercepts by the way. Among the best was 1,369 metres @ 1.1 g/t Au and 1.7% copper. This included 428 metres @ 2.2 g/t Au and 2.9% copper, starting some 400 ore so metres downhole. You can bet it will be these latter grades Newcrest and Harmony target.

Question now is will it work?

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