Harmony Gold Mining Co and its Wafi-Golpu joint venture (WGJV) partner Newcrest Mining have signed a Memorandum of Understanding (MOU) with the Independent State of Papua New Guinea.

The MOU is an affirmation of the parties’ intent to proceed with the Wafi-Golpu project, subject to finalisation of the permitting process and Harmony and Newcrest board approvals. It establishes the framework for the parties to progress the permitting of Wafi-Golpu as quickly as practicable in accordance with applicable regulatory processes.

The MOU provides a framework of key terms to be included in the Mining Development Contract and other related agreements with the state, including provision for stability to underpin the significant long-term investment required to develop and operate the project.

The agreement also re-affirms the intention of the parties to complete the permitting process and achieve grant of a Special Mining Lease by 30 June, 2019.

“This MOU is an important step in progressing the permitting of the Wafi-Golpu project. I wish to thank Prime Minister O’Neill and his government for the constructive manner in which they have worked with the WGJV partners and for the commitment demonstrated in advancing this important project in the best interests of the people of Papua New Guinea and shareholders,” said Peter Steenkamp, Chief Executive Officer of Harmony.

He added: “Our joint understanding of the terms and timeline that we are working towards as set out in the MOU is central to the commencement of the initial work programme. Harmony is committed to make a meaningful contribution to the social and economic development of Papua New Guinea and we look forward to continue working with the government and people of Papua New Guinea to complete the permitting process.”

As a result of entering into the MOU, the WGJV is completing approval processes to commence a substantial work programme, including the establishment of underground access for further drilling of the Golpu deposit and the construction of a bridge over the Markham River, which is an integral feature of the proposed new Northern Access road from the Highlands Highway to the mine site.

The MOU recognises that development of the Wafi-Golpu project will be of major economic significance to the people of Papua New Guinea, and encourages the development of the project in a way which will contribute to the advancement of the social and economic welfare of the people of Papua New Guinea, while also providing a viable and stable foundation for the long term development of the Project by the WGJV.

The Golpu deposit is located approximately 65 km southwest of Lae in the Morobe Province of PNG, which is the second largest city in PNG and will host the Wafi-Golpu export facilities. The proposed mine site sits at an elevation of some 200 m above sea level in moderately hilly terrain and is located near the Watut River about 30 km upstream from the confluence of the Watut and Markham rivers.

The feasibility study update was released in March 2018. Project economics set out in that demonstrate significant free cash flow generation. Once in production, the asset has the potential of being one of the lowest decile cost copper-gold producers.

The WGJV submitted an Environmental Impact Statement for the project to the relevant PNG regulatory authority, Conservation and Environment Protection Agency in June 2018. Consultation with the regulatory authority, community and other stakeholders is ongoing.

The project has mineral resources estimated to contain 26 Moz of gold, 8.8 Mt of copper and 48 Moz of silver. This includes ore reserves for the Golpu deposit estimated to contain 11 Moz of gold and 4.8 Mt of copper.

Currently, the Wafi-Golpu project includes the Golpu copper-gold porphyry deposit, the Nambonga copper-gold porphyry deposit and the Wafi high sulfidation epithermal gold deposit.

Exploration activity to date has shown that the Wafi-Golpu tenements host one of the highest grade porphyry copper systems in southeast Asia (the Golpu deposit).

The Golpu deposit is one of several porphyry ore bodies identified along the 25 km long Wafi-Transfer. Newcrest and its joint venture partner are actively exploring this highly prospective terrain for additional deposits.

The plan is to develop the Nambonga decline and twin underground access declines to access the orebody in which three block caves and associated services and infrastructure will be developed, including a portal terrace, the Watut process plant, power generation facilities, laydown areas, water treatment facilities, wastewater discharge and raw water make-up pipelines, raw water dam, sediment control structures, roads and accommodation facilities. Block caving is the proposed mining method.

The project area comprises three main areas of proposed activity:

• Mine area – The proposed mine area is located on the northern side of the Owen Stanley Ranges of PNG, approximately 65 km from the Port of Lae, in the foothills of the Watut River catchment. The elevation of the Mine Area ranges from about 100 m above sea level (mASL) to 380 mASL. Most of the area is steep and mountainous, and is covered by dense tropical rainforest.
• Infrastructure corridor – The proposed corridor is situated on the floodplains of the Watut and Markham rivers and includes the Mine Access Road. The proposed 32 km long Northern Access Road connects the Mine Access Road to the Highlands Highway. A concentrate pipeline extends from the Mine Area to the Coastal Area.
• Coastal Area – This includes the proposed Port Facilities Area and the proposed Outfall Area. The proposed location of the filtration plant and associated materials handling and ship loading facility is the Port of Lae and the Outfall System comprising the mix/de-aeration tank and associated facilities is located some 6 km to the east of the port, in close proximity to the Markham River estuary on the Huon Gulf.

Harmony and Newcrest each currently own 50% of Wafi-Golpu through the WGJV. The State of PNG retains the right to purchase, at a pro rata share of accumulated exploration expenditure, up to 30% equity interest in any mineral discovery at Wafi-Golpu, at any time before the commencement of mining. If the State of PNG chooses to take-up its full 30% interest, the interest of each of Harmony and Newcrest will become 35%.