Harmony Gold and its partner Newcrest Mining have signed a framework Memorandum of Understanding (MOU) with the Independent State of Papua New Guinea for the joint multi- billion dollar Wafi-Golpu project.
In a statement, Harmony said the MOU was an affirmation of their intent to proceed with the Tier 1 Wafi-Golpu Project, subject to the finalisation of the permit process, and approval by both the Harmony and Newcrest boards.
Harmony and Newcrest each own 50% of the project through their respective subsidiary WGJV (Wafi-Golpu Joint Venture) participant companies.
Harmony Gold CEO Peter Steenkamp, said the MOU was important to progress with the permitting of the Tier 1 Wafi-Golpu Project, one of the world’s premier, undeveloped copper-gold deposits.
"I wish to thank Prime Minister Marape 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 and long-awaited project.
"The principles agreed provide a basis for the equitable distribution of the benefits from this project to landowners, communities, the Morobe Provincial Government, and the Independent State of Papua New Guinea, while supporting meaningful returns for the developers and providers of capital,“ he said.
The MOU sets out key terms to be included in the Mining Development Contract, which is a prerequisite for the granting of a Special Mining Lease (SML).
"The term and scope of the SML included the equity participation by the state and its nominees, including landowners and the Morobe Provincial government; fiscal matters, including the royalty rate and taxation; provision for fiscal and regulatory stability to underpin the significant long-term investment required to develop and operate the Project," the group said.
The terms also include social contributions including business development, infrastructure, and other social development projects for local communities.
"The MOU also sets out the framework to progress the permitting the project as quickly as practicable in accordance with applicable regulatory processes," it said.
The MOU also recognised that the development of the project would be of major economic significance to the people of Papua New Guinea.
The project is located about 65km south-west 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 site sits at an elevation of some 200 metres above sea level and is located near the Watut River, about 30km upstream from the confluence of the Watut and Markham Rivers.
“The state of PNG retains the right to purchase, at a pro-rata share of accumulated exploration expenditure, up to 30% equitable interest in any mineral discovery at Wafi-Golpu, exercisable at any time before the commencement of mining.
“If the state chooses to exercise its right of purchase, it will be required to contribute to the costs of the development along with the WGJV participants,” the group said.
In 2018, Harmony did a feasibility study, where it estimated that the total project capital was $5.36 billion.
The average annual gold production was estimated to be about 266 000 ounces and the copper output of 161 000 tons. The life of mine of the project was expected to be 28 years.
BUSINESS REPORT