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Form 20-F
☒
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Form 40-F
☐
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Yes
☐
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No ☒
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Tonnes(Mt)
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Gold Grade(g/t Au)
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Copper Grade(% Cu)
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Insitu Gold(Moz)
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Insitu Copper(Mt)
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Probable Ore Reserve
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200
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0.86
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1.2
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5.5
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2.5
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Criteria
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Commentary
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Sampling techniques
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Diamond drill
holes are the principal source of geological and grade information
for the Golpu deposit. Diamond core drilling was used to obtain
continuous samples ranging in size from PQ3 to NQ3 with rare
intervals of BQ which were cut into half (in the case of HQ, NQ and
BQ) and into half or quarter (in the case of PQ) using a diamond
core saw, from which half or quarter is prepared for assay and the
remaining core retained in the core farm as reference.
The half or
quarter core sent for assay was bagged in labelled calico sample
bags with the sample number scribed on an aluminium strip included
in the bag. The calico bags were placed in larger polyweave bags
and transported by road or helicopter to Lae by company employees.
Sampling intervals are typically 1m or 2m fixed intervals. The
entire half or quarter core is dispatched for sample preparation.
Core recovery is recorded to ensure a representative sample is
obtained.
All core was
logged and photographed prior to cutting. Some core was wrapped in
tape during sampling to maintain core quality. Oriented core is cut
along the orientation line at the bottom of hole to reduce the
possibility of sample bias. Sample numbers and drill hole intervals
were recorded by the responsible geologist and used by technicians
for cutting and sampling. A sample despatch sheet documenting the
sample numbers and required assay work was sent with each sample
batch to the laboratory.
All drill core is
sampled and assayed over the entire hole length. However empirical
rock strength data is required for geotechnical input to mine
designs - since 2011 approximately 20cm of whole core was taken at
50m intervals from all holes for Unconfined Compressive Strength
testing which were not assayed. This is not considered to present a
material impact on sample quality due to the disseminated,
stockwork and micro-fracture infill nature of the
mineralisation.
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Drilling techniques
|
Diamond core
drilling, PQ, HQ, NQ and BQ in diameter, triple tube core barrels
and oriented typically using the ACE core orientation
system.
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Drill sample recovery
|
Core recovery is
recorded for all diamond drilling on a metre by metre basis as a
percentage. Sample recovery was 96.4% over the entire drilling
dataset including oxide material and the adjacent Wafi epithermal
mineralisation but increases to 98.4% within the Golpu Mineral
Resource volume. All drilling is conducted using triple tube core
barrels and appropriate core handling protocols. No material
relationship has been identified between core recovery and grade
due to the diffuse nature of the mineralisation in the Golpu
porphyry-style deposit.
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Logging
|
All diamond drill
core has been geologically and geotechnically logged to support
appropriate Mineral Resource estimation, mining studies and
metallurgical studies. Geological logging is both qualitative and
quantitative and records lithology, mineralisation, alteration
mineralogy, weathering, structures and other physical
characteristics of the core.
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Sub-sampling techniques and sample preparation
|
Sample
preparation protocols for drilling in the Golpu area has varied
over time. However, all core is sawn in half or quarter typically
cut beside the orientation line. Only minor intervals of second
half core submission has been conducted. The entire sawn half or
quarter core is submitted for the first stage of sample
preparation. All subsequent sampling is by riffle or rotary
splitters to ensure sub-sample representivity until homogenised in
the pulverisers. Grind size screening was typically applied also to
maximise sub-sampling representivity and to ensure compliance to
sub-sampling sample mass requirements.
Historic sampling
from CRAE/Elders drilling 1990-1996 was prepared at Pilbara
(Analabs) Laboratories in Lae. All samples were dried and jaw
crushed to a nominal 5mm, then entirely pulverised to 180 microns.
A sub sample of 500g was obtained with a riffle splitting device
which was pulverised in a LM2 to nominal 75 micron. A 100g sub
sample (pulp) was obtained and despatched for
analysis.
Sample
preparation for Harmony and WGJV drill holes 2005-2011 was carried
out at Intertek Lae sample preparation facility with pulps sent to
Intertek Jakarta for assay. All samples were dried at 60°C and
then jaw crushed to nominal 2mm. A sub sample of 1.5kg was obtained
with a riffle splitting device which was pulverised to 75 micron
using LM2 mill. An approximate 250g sub sample (pulp) was obtained
and despatched for analysis.
Sample
preparation for WGJV drill holes 2012-2014 was carried out at the
Intertek sample preparation facility in Lae. All samples were dried
at 60°C, then crushed in a Boyd Crusher to a minimum 95%
passing 2.8mm. A sub sample of 3.5kg (±0.5kg) is obtained
using a Rotary Splitting Device (RSD) and pulverised in a LM5 mill
with a minimum 95% passing 106 microns. An approximate 250g sub
sample (pulp) was obtained and despatched for analysis.
Representative pulverised material and crushate reject is retained
for all samples. Repeat samples are obtained from pulverised
material at the rate of 1 in 20 samples and check crusher
duplicates have also been analysed.
The sampling
techniques used over the history of the project are considered
appropriate for assessment of porphyry mineralised
systems.
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Quality of assay data and laboratory tests
|
QAQC protocols
for Golpu drilling have varied over the project’s 24 year
history.
CRAE and Elders
(1990-1996) sampled at Pilbara Laboratories Lae did not have the
support of regular submission standards or duplicates and but were
supported by regular submission of pulp splits to a second
laboratory. Gold was determined by 50g Fire Assay with AAS finish
and multi-element analyses including copper, silver, molybdenum,
arsenic and iron were determined using AAS. Approximately 20% of
composites used in the Golpu Mineral Resource model are derived
from CRAE / Elders drilling – this are located in the upper
Golpu Porphyry where there is also significant drill data acquired
by Harmony.
Drilling by
Harmony and WGJV 2005-2014 was analysed at Intertek Laboratories
Jakarta and included submission of certified standards, blanks,
quarter core duplicates and re-assay of selected pulp splits at a
second laboratory. Gold was determined by 50 or 30g Fire Assay with
AAS finish, multi-element analyses including copper, silver,
molybdenum, arsenic and iron was determined by 2 acid ICPMS\OES
finish analyses. From October 2013 multi-element analyses have been
determined by 4-acid (full) digest with ICPMS/OES finish. From 2013
gold has been analysed at the Intertek Lae Laboratory. Total
sulphur was determined by Leco.
Pulp samples
shipped to Jakarta are re-dried in their original pulp packets at
<60°C for a minimum of 4 hours or until dry before
analysis. Certified reference materials were inserted at the rate
of 1 in 20 samples. Matrix-matched samples from coarse reject
Wafi-Golpu sample material were homogenised, independently
certified and implemented into the QA sample stream from April
2013. Pulp samples (second sample from LM5 bowl) within each sample
batch are submitted at the rate of 1 in 20 samples. Coarse
duplicates have also been analysed and additionally 5% of all pulps
with accompanying new standards are checked at an independent
laboratory.
Assay results are
assessed on a per-batch basis on receipt of assays to determine
appropriate levels of accuracy and bias in gold and copper
analyses. The acceptance tolerance must be within defined site QAQC
protocols. Routine check assay programmes are conducted on a
periodic basis. All preparation and analytical laboratories
including check laboratories have been reviewed for operational
procedures and QAQC compliance by project geologist and QAQC
chemists.
The analysis
methods employed are considered appropriate for the material and
mineralisation. No material issues have been identified that
invalidate the use of primary assays now held in the Wafi-Golpu
Datashed database for Golpu deposit grade estimations.
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Verification of sampling and assaying
|
All field data is
captured digitally into a Logchief logging system, stored
electronically in a Datashed database, and exported to a Lae based
Datashed database, which is maintained by the Database Manager.
Digital assay files are received directly from the laboratory and
input directly to Datashed. Significant intersections are reported
by the geology team, and verified by the Geology
Manager.
No specific holes
have been twinned at Golpu. However due to the drilling
configuration (typically towards grid west or to grid west on the
common sections and multiple holes from a single drill pad with
small variation in dip), multiple holes cross in close proximity.
No inconsistency in sampling and assaying have been
identified.
No adjustment has
been made to reported assays for use in the estimation of the
Mineral Resource.
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Location of data points
|
The local grid
called Wafi Local Grid (WLG) is a planar grid oriented
approximately 45 degrees from north which is used up for block
modelling and geology databases. The height datum is Mean Sea Level
but 5,000m is added for WLG. WLG is datum point referenced to PNG
Geodetic Datum 1994. Topographic control is by digital terrain
models derived from a high resolution Lidar survey of the Golpu
area conducted in 2007 with a reported spatial accuracy of
0.2m.
Drill hole collar
locations are located using hand held global positioning system
(GPS) and completed drillhole collars surveyed in the Wafi Local
Grid by a qualified and competent surveyor using a theodolite or
differential GPS.
Downhole surveys
were completed on all holes typically at 18m and then every 30m
down the hole. Elders and CRAE drillholes were surveyed using an
Eastman single shot camera and Harmony / WGJV drillholes were
surveyed using a Reflex downhole survey tool. From 2011 surveys
have been conducted by a fully competent and licensed contractor
using a north-seeking gyroscope instrument.
For all periods
of the drilling programme, downhole surveying was determined using
the latest available methodology. These are considered sufficiently
accurate to locate all assays to the level of precision required
for classification as an Indicated or Inferred Mineral
Resource.
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Data spacing and distribution
|
Drillhole spacing
within the Golpu deposit ranges from less than 100m x 100m in the
upper portion of the deposit and up to 200m x 200m in the lower
portions of the deposit. The drill spacing is considered sufficient
to establish the degree of geological and grade continuity
appropriate for Mineral Resource classification of a large porphyry
gold/copper system. Drillholes are entirely sampled at regular 1m
or 2m intervals regardless of lithological or mineralogical
boundaries. Assays are composited to 10m downhole intervals for use
in grade estimation.
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Orientation of data in relation to geological
structure
|
The Golpu
mineralised system is approximately elliptical in plan elongated
towards 345 degrees WLG with a steep west to sub-vertical dip. The
majority of drilling is oriented across this orientation, but the
dataset does include holes drilled parallel to the long axis. Most
holes are complete transects through the porphyry and enclosing
mineralised host sediments. The orientation of sampling is
considered unbiased toward known structures and adequate for the
diffuse nature of the mineralisation style i.e. porphyry gold
copper mineralisation.
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Sample security
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Diamond drill
core is delivered directly from the drill rig at the end of each
shift by the drill crew to the logging shed within the fenced and
patrolled Wafi Camp security compound. Core is marked up and
photographed as soon as possible to identify any core loss and
ensure size and consistency of the samples. Historically all core
was sawn in half at the Wafi site and half core for assay bagged
into calico bags and in turn secured in plastic bags. Samples are
identified by both internal aluminium tags and external labelling.
Some whole core was directly shipped as plastic-wrapped and secured
trays to the dedicated core farm within the security patrolled
compound at Nine Mile, Lae. Core is sawn, bagged and identified as
for the Wafi site procedures.
Whether
transported as whole core in trays or bagged sawn core samples, all
transport is always under the direct supervision of WGJV employees
within tamper evident packaging from site until delivery to the
Intertek Laboratory in Lae. Pulps and crusher residues are returned
from the Lae laboratory to the Nine Mile core farm for long term
storage again under direct supervision of WGJV staff.
Since 2005, core
samples were prepared in Intertek, Lae within their secured
premises and pulps are air-freighted by international couriers to
Intertek Laboratory in Jakarta, Indonesia for assaying. A detailed
labelling, documentation and tamper evident packing protocol is in
place for this transfer. Pulps are stored on a long term basis in
Jakarta. Assay results from Intertek Jakarta are returned to WGJV
network and loaded to the Wafi database by dedicated administrators
after correlation against despatch records and after passing QAQC
protocols.
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Audits or reviews
|
Internal reviews
of core handling, sample preparation and assays laboratories were
conducted on a regular basis by both project personnel and owner
representatives. External consultants also reviewed sampling
protocols and based on heterogeneity studies for sampling mass and
sampling precision provided recommendations to improve QAQC early
in the drilling program.
In the Competent
Persons opinion, the sample preparation, security and analytical
procedures are consistent with current industry standards and are
entirely appropriate and acceptable for the styles of
mineralisation identified and will be appropriate for use in
Mineral Resource estimates. There are no identified drilling,
sampling or recovery factors that materially impact the adequacy
and reliability of the results of the drilling programme in place
on the Wafi-Golpu Property.
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Criteria
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Commentary
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Mineral tenement and land tenure status
|
The Wafi-Golpu
project is located in Exploration Licence (EL440) within the Morobe
Province of Papua New Guinea. The property is located at
approximately 6º52'S latitude, 146º27'E longitude
approximately 60 km southwest of Lae, the nearest commercial centre
within the region with a population of about 90,000.
The owner of the
project is the Wafi-Golpu unincorporated joint venture (WGJV), one
of three unincorporated joint ventures in the Morobe Province of
Papua New Guinea between subsidiaries of Newcrest Mining Limited
(Newcrest) (50%) and Harmony (50%) referred to collectively as the
Morobe Mining Joint Ventures (WGJV). The WGJV holds two exploration
licences covering a total area of approximately 129 km2, registered in the
name of the WGJV participants Newcrest PNG2 Ltd (50%) (a wholly
owned Newcrest subsidiary) and Wafi Mining Limited (50%) (a wholly
owned Harmony subsidiary). Key proposed infrastructure areas are
located on adjoining EL1105.
EL440 tenement
licence expires in March 2018 and a renewal was lodged in December
2017 which is currently pending. The EL1105 tenement licence
expires in January 2019. Both tenements remain in good
standing.
Subject to the
project being developed, a royalty of 2% of net smelter revenue and
a Mining Levy of 0.25% is payable to the Government of Papua New
Guinea.
A compensation
agreement with local landowners is in place whereby specified
payments are made due to impacts of exploration activities
including loss of trees, impact on water resources, access
restrictions, and disturbance to sacred sites and burial
sites.
Consistent with
the current administrative practice of the Government of Papua New
Guinea and under the terms of the Wafi-Golpu exploration licences,
the Government of Papua New Guinea has reserved the right to
acquire up to a 30% equitable interest in the project. In January
2011, the PNG Government indicated an intention to exercise the
option, nominating the State-owned Petromin PNG Holdings Limited to
take up the interest. The option is exercisable at any time prior
to commencement of mining. Under the terms of the State option set
out in the Wafi-Golpu exploration licences, the price payable for
the interest is the proportionate share of the accumulated
exploration expenditure at the point of exercise. Post-exercise,
the State holding entity will be responsible for their
proportionate share of continuing exploration, development and
project costs.
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Exploration done by other parties
|
Exploration has
been conducted by the WGJV since 2008. Previous exploration
activity has been documented by many workers, and notably includes
Harmony, Abelle, Elders and CRA during their tenure since the
1970’s. The Golpu Porphyry was discovered by Elders in 1991
and the high grade Hornblende (Livana) Porphyry by WGJV in 2010.
Data transferred from previous exploration programmes has been
assessed for quality and risk associated with inclusion of this
data evaluated in the Mineral Resource estimation.
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Geology
|
The Golpu deposit
lies in a block of deformed Upper Mesozoic to Middle Miocene
metasedimentary to sedimentary rocks cut by Miocene-Pliocene
calc-alkaline dioritic intrusives. Copper and gold mineralisation
results from a multiple intrusive porphyry system with the upper
portion overprinted by high sulphidation epithermal alteration.
Post mineral faulting has displaced and rotated the original
intrusive configuration.
The deformational
history of PNG is characterised by accretion during oblique
collision of the Australian and Pacific plates. A series of
arc-normal transfer structures formed across PNG which taped mantle
derived melts to high crustal levels. One of these structures
termed the Wafi Transfer Structure is interpreted to have
facilitated the emplacement of the Golpu intrusives.
The Golpu
Porphyry system consists of multiple, hornblende-bearing diorite
porphyries intruded into host sediments. The porphyries are
separated based on their spatial position, and where not texturally
destroyed, into coarse hornblende-rich, feldspathic-rich or quartz
‘eye’ inclusions variants. Intrusives range from small
dykes to small stocks and apopheses. Individual intrusions pinch
and swell vertically over tens of metres and form stocks, pipes and
dykes.
The Golpu deposit
is approximately 800m by 400m elliptical in plan and extends from
200m below surface to approximately 2,000m. Hydrothermal alteration
related to the porphyry gol-copper mineralisation forms a
predictable zonal arrangement grading from potassic core to
propylitic margins. A high-sulphidation epithermal system is
‘telescoped’ over the upper portion of the porphyry
system forming a central alunite–quartz (advanced argillic)
core grading out to dickite–kaolinite (argillic) with an
outer margin of sericite alteration. This results in either
epithermal-dominant, interaction (mixed) or porphyry-only zones
within the Golpu deposit.
Mineralisation is
derived from either the porphyry or epithermal systems. Within the
porphyry environment, mineralisation is disseminated, microfracture
and stockwork vein controlled. The dominant copper-gold sulphide
species varies laterally and vertically within the deposit from an
inner bornite (plus chalcopyrite) core, chalcopyrite as the
dominant copper sulphide grading to a pyrite only shell. The
porphyry system is mineralised with gold, copper, silver and
molybdenum. The Livana Porphyry is the main mineralised porphyry.
Other porphyries act either as weak mineralisers or as benign
hosts.
In the high
sulphidation epithermal system which is ‘telescoped’
over the upper portion of the Golpu Porphyry, gold occurs within
pyrite or as electrum associated with pyrite-enargite-tetrahedrite.
Abundant arsenian pyrite results in high sulphur and elevated
arsenic levels in the epithermal altered volume. Mineralisation
broadly follows the metasedimentary and volcanic host rocks
stratigraphy (40° dip to east).
Post-mineral
thrust (reverse) faulting has dismembered the original porphyry and
epithermal systems with offsets of up to 200m within the
mineralised column and rotated the high grade porphyry core between
faults to dip 70 degrees to grid west.
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Drill hole Information
|
No exploration
has been reported in this statement, therefore there is no drill
hole information to report. This section is not relevant to this
report on Mineral Resources.
Comments relating
to drill hole information relevant to the Mineral Resource estimate
can be found in Section 1 – “Sampling
techniques”, “Drilling techniques” and
“Drill sample recovery”.
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Data aggregation methods
|
No exploration
has been reported in this release, therefore there are no drill
hole intercepts to report. This section is not relevant to this
report on Mineral Resources.
Comments relating
to data aggregation methods relevant to the Mineral Resource
estimate can be found in Section 1 – “Sampling
techniques”, “Drilling techniques” and
“Drill sample recovery”.
|
Relationship between mineralisation widths and intercept
lengths
|
No exploration
has been reported in this release, therefore there are no
relationships between mineralisation widths and intercept lengths
to report. This section is not relevant to this report on Mineral
Resources.
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Diagrams
|
No exploration
has been reported in this release; therefore, no exploration
diagrams have been produced. This section is not relevant to this
report on Mineral Resources.
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Balanced reporting
|
No exploration
has been reported in this release, therefore there are no results
to report. This section is not relevant to this report on Mineral
Resources.
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Other substantive exploration data
|
No exploration
has been reported in this release, therefore there are no results
to report. This section is not relevant to this report on Mineral
Resources.
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Further work
|
No further
exploration is planned for the Golpu Mineral Resource volume.
Specific underground drill programs have been designed within the
2015 Golpu FS BC1 and BC2 volumes to increase confidence in local
grade precision and refine geotechnical conditions at critical mine
and supporting infrastructure locations. Such programs would be
implemented after establishment of access declines. Proposed
additional surface drilling is confined to infill geotechnical
investigations of access paths. These proposed drill programmes are
not exploration related.
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Criteria
|
Commentary
|
Database integrity
|
Data from the
Golpu Project is stored within the WGJV ‘Datashed’
software database located at the Lae office, PNG. Drill core is
logged directly into laptops in the core shed with periodic
integration to the WGJV database. Assay data is received from the
laboratory in digital format which is subsequently uploaded to the
WGJV database using import templates. All data uploaded to the
database must pass a data integrity checks and reviews. User access
to the database is controlled by a hierarchy of permissions and are
controlled by WGJV database administrators with oversight of data
integrity by an external Datashed software specialist.
Historical assay
data collated by CRAE was imported into the WGJV database from an
existing MS Access database. The process used by CRAE to transfer
assay data into their database is not recorded, however checks of
the assay data in the database with the original hardcopy results
indicate they are satisfactory for use in a Mineral Resource
estimate.
Detailed data
review was completed before the estimation of the Golpu December
2015 Mineral Resource estimate. Checks included validation of
collar surveys against planned locations and downhole surveys
consistency of hole path. Assays were reviewed and compared against
observed mineralisation. Logging records were reviewed against core
photographs as part of the interpretative geology compilation. All
corrections were completed before final data extraction for input
to the Mineral Resource estimation.
|
Site visits
|
The Competent
Person is an employee of Newcrest Mining and travelled to site on a
regular basis as a former member of the WGJV team during the last
resource drilling campaign. Site visits validated the documented
mapping, drilling, logging and sampling processes and on-site data
management. Laboratory visits to the Lae preparation laboratory,
Lae fire assay laboratory and Jakarta assaying facilities were
conducted to verify assaying and QAQC procedures.
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Geological interpretation
|
The December 2015
geology model for the Golpu deposit includes lithology, alteration,
oxidation, sulphide distribution and structures wireframes. Fault
wireframes include major thrust faults which displace
mineralisation. The most significant thrust is the Reid Fault which
displaces the upper Golpu mineralisation approximately 200m up-dip
with a small displacement to the north.
All lithological,
porphyry-related alteration and fault models were constructed in
Leapfrog software using implicit modelling interpolations from
primary logging codes and modified for interpretative correlations
of logged intervals. The implicit modelling methodology is
considered less subjective than traditional sectional
interpretations.
ASD and
‘Corescan’ spectral mineralogical data was used in
conjunction with the current logged alteration dataset. This
enables a higher level of resolution of the layered epithermal
system especially for subdivision of clays and other difficult to
distinguish indicator minerals of alteration type and
intensity.
Estimation
domains are a combination of mineralised porphyry or host units,
alteration type and fault partition.
All geological
contacts are honoured in the geological interpretations used for
grade estimation domains. The confidence in the geological volumes
and lithological and faulted contact correlations that were used in
the estimation domains is reflected in the resource classification.
The geological and structural framework used in the Mineral
Resource has also been externally reviewed. It concluded that the
current model is supported by contacts seen in core and makes
kinematic and geometric sense with no obvious flaws. There is
sufficient drill data to constrain the geological model that
alternative interpretations will not be materially different from
the framework used in the 2015 Mineral Resource. The geological and
structural model has defined the major structural and lithological
contacts that impact grade continuity.
|
Dimensions
|
The Golpu deposit
is approximately 800m by 400m elliptical in plan and extends from
200m below surface to approximately 2,000m depth.
|
Estimation and modelling techniques
|
The Golpu Mineral
Resource grades were estimated with Ordinary Kriging using pairwise
variograms of 10m composites for seven elements: gold, copper,
silver, molybdenum, sulphur, arsenic, and iron with Vulcan software
using domain specific variograms and search for informing 10m
composites using the variogram anisotropy. The grades were
estimated into a block model with 40m x 40m x 40m parent cells with
10m x 10m x 10m resolution on domain margins. This reflects the
estimation precision available from the drillhole spacing of less
than 100m x 100m in the upper portion of the deposit and up to 200m
x 200m in the lower portions of the deposit and the planned mining
method (block caving). Variograms are typically low nugget (7-17%
for gold and 5-30% for copper) with long ranges. Search parameters
vary by element and estimation domain but reflect the orientation
and ranges of the variograms. The maximum number of samples per
block typically restricts the actual distance of informing samples
to substantially less than the search limits. While there are
spatial associations between elements, all are estimated
independently.
The grade
estimation is based on an underlying ‘diffusion’ model
where grade trends from lower to higher values from the
mineralisation margin to the porphyry core in a relatively
continuous relationship. Domain drift is apparent for the porphyry
system and pairwise variograms were used for modelling grade
continuity. Contact analyses indicated the Hornblende (Livana)
Porphyry has abrupt grade contacts and is modelled independently.
Estimation domains are also bounded at all major thrust faults
where drilling has demonstrated clear grade truncations. Most other
estimation domains are continuous ‘diffusive’
transitions from mineralised porphyry margins to the mineralisation
limit regardless of host lithology. All porphyry-related domains
are modelled with an orientation defined by the elongation of the
porphyry system. All epithermal, oxidation and cover sequence
domains have shallow dips to grid east again reflecting their
overall orientation.
Top-cuts were
applied to gold and copper composite grades but have no impact on
global estimated Mineral Resources. No top cuts were applied to
arsenic composites. This is a potential contaminant in copper
concentrate and sensitivity to high grade arsenic composites is
required to evaluate the final As content potentially delivered to
concentrate.
Silver and
molybdenum are modelled as they may reach potentially extractable
by-products however silver and molybdenum are not included in the
revenue estimation. Sulphur and iron are estimated as they inform
sulphide speciation and gold:sulphur and copper:sulphur ratios are
included in metallurgical recovery models.
The model has
been validated by comparison with informing composite declustered
statistics and alternative modelling methods including conditional
simulations. Alternative models constructed included nearest
neighbour, inverse distance, raw variogram Ordinary Kriging,
Discrete Gaussian Model, and Conditional Simulation models with
Sequential Gaussian into nodes and Direct Block Simulation using
Turning Bands into 10m blocks. The impact of independently
domaining the Livana Porphyry as a ‘hard’ boundary
compared to incorporation into a continuous grade trend was also
evaluated.
The risk
associated with the inclusion of historical data has been evaluated
by re-modelling without the non-QAQC validated data - there is no
material change between models. Historical assays have been
included in the Mineral Resource estimate to improve local
estimation precision only.
There are no
selective mining units applied to the Mineral Resource reflecting
the planned mining method.
The grade,
recovery and value models used to quantify the Golpu Mineral
Resource are considered appropriate for the style of mineralisation
and are suitable for the required estimation precision for the
planned mining method – block caving.
|
Moisture
|
All tonnages are
calculated and reported on a dry tonnes basis.
|
Cut-off parameters
|
The Mineral
Resource estimate is reported within a break-even value shell using
the 2017 (unchanged from 2015) Mineral Resource revenues from gold
and copper only and the cost structure from the 2015 Stage 2 PFS
(Life-of-Mine-Plan based on 14Mt/year from block cave mining with
processing by sulphide flotation producing a copper concentrate for
pumping to Lae port and shipment to overseas smelters). Costs
include block cave mining, treatment / processing and General and
Administration (G&A). Net Smelter Return (NSR) includes
metallurgical recoveries and off-site realisation (TCRC) including
royalties. Gold revenues assumptions are US$1,300/oz and copper
US$3.40/lb.
The value of each
in-situ block is estimated and a smoothed shell generated at the
break-even margin. The shell includes internal below value cut-off
blocks and excludes isolated above cut-off blocks. While not a
block-cave design, the shell is representative the bulk mining
method planned – block caving. All Mineral Resources are
constrained within the margin breakeven ‘value’ shell
representing the limit to eventual economic
extraction.
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Mining factors or assumptions
|
The Mineral
Resource estimate is reported within a notional constraining shell
at the marginal break-even cut-off, based on mass mining by block
caving with no internal selectivity. The 40m x 40m x 40m
block-model size and the application of a constraining spatial
shell that includes all internal materials and excludes above
margin break-even blocks outside the notional shell reflects the
non-selective planned mining method.
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Metallurgical factors or assumptions
|
The metallurgical
recovery included in the margin estimation is based on ore
processing by copper flotation with copper and gold recovery to
copper sulphide concentrate.
Significant
test-work has been completed to establish recovery algorithms for
copper and gold. Metallurgical domains are based on the host
lithology and alteration type. Each metallurgical domain is
assigned a recovery algorithm further subdivided on copper:sulphur
and gold:sulphur ratios. Estimated metallurgical recovery is
included in the quantification of the Mineral Resource reporting
margin value cut-off. For the Mineral Resource cut-off, recovery
models are applied for porphyry, high chalcopyrite porphyry,
sediments and epithermal alteration domains.
Silver and
molybdenum are included in the Mineral Resource reporting volume
but revenues are not included in the margin value estimation in
line with the 2015 Stage 2 PFS. There is no dedicated recovery and
revenue path in the 2015 Life-of-Mine PFS for these elements but
both have reasonable prospects of eventual economic extraction with
only minor changes to the metallurgical flow-sheet. Current
modelling indicates silver in copper concentrate will not
consistently be above payable grades but this can be potentially
achieved during concentrate marketing negotiations. Molybdenum will
similarly not always be above cut-off grades however potentially
economic grades are present within the block-cave
volume.
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Environmental factors or assumptions
|
Based on
environmental characterisation completed to date, there are no
recognised physico-chemical or biological environmental factors
that will limit potential mining or milling operations. Geochemical
assessment of rock and tailings has been completed to quantify acid
forming characteristics and composition of the material. Waste rock
locations, construction and dump design alternatives have been
evaluated and designed given this information, with adequate
controls allowed for acid rock drainage management. Hydrological
models have been undertaken and test water bores have been
constructed to evaluate mine vicinity water flows. Mine water will
require treatment for both entrained silt contents and acid rock
drainage and pH management before eventual discharge to the
receiving environment. Treatment of water will ensure a quality
that meets PNG Receiving Water Criteria to mitigate potential
impacts to downstream communities and the environment. Options for
terrestrial tailings dams have been evaluated and viable options
designed. All development and production activities will be
permitted by the PNG Department of Environment and Conservation
under the Environment Act (2000).
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Bulk density
|
Bulk density has
been determined on 10cm core samples typically at 10m intervals
down all holes. Methods used to derive bulk density values include
air/water (approximately 95%) and wax/water (approximately 5%)
where samples are friable. The average bulk density, after
statistical review and removal of outliers, is assigned to domains
derived from a combination of oxidation, alteration and lithology.
The assignment of a constant bulk density per domain assumes
limited internal variation within the domain. No elements
reflecting sulphide mineralogy are considered significantly
abundant to correlate bulk density and grade within the reported
Mineral Resource volume.
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Classification
|
The Mineral
Resource is classified based on: geological confidence as a
function of continuity and complexity of geological features; data
spacing and distribution; and estimation quality parameters
including distance to informing samples for block grade
estimation.
Indicated Mineral
Resource, where the geological framework can be modelled with
confidence and mineralisation continuity can be assumed, is
classified from below the intense epithermal alteration zone to the
4,100m Wafi Grid Level (WGL) - approx. 1,400m below surface or to a
major interpreted fault at similar depth. Below this fault and
above 3780m WGL, drillhole spacing is increased and geological and
grade continuity is less reliable – this volume is classified
as Inferred Mineral Resource. All Mineral Resources are constrained
within the margin breakeven ‘value’ shell representing
the limit to eventual economic extraction. It is the Competent
Person’s view that the classifications used for the Mineral
Resources are appropriate for the deposit.
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Audits or reviews.
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The geological
and structural framework used in the Mineral Resource has also been
externally reviewed. It concluded that the current model is
supported by contacts seen in core and makes kinematic and
geometric sense with no obvious flaws. The Mineral Resource
estimate was the subject of independent external review by AMC. No
material issues were identified in these reviews and AMC concluded
that the estimates had been prepared using accepted industry
practice and classified and reported in accordance with the JORC
2012 Code.
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Discussion of relative accuracy/ confidence
|
For an Indicated
Resource estimate it is considered reasonable for the local
relative uncertainty to be +/- 15% in tonnage, grade and metal
(exclusive of each other, i.e., each variable has to satisfy the
criteria) for an annual production volume at a 90% confidence
level. Direct block co-simulations (gold and copper) of the annual
production volumes represented by the average height of draw for
BC1 and BC2 in the 2015 Golpu FS were evaluated to demonstrate
confidence intervals. This evaluation indicates this criterion can
be satisfied. Relative uncertainties and confidence level estimates
are considered for both copper and gold as they are both
significant economic contributors. There is no production from the
Golpu deposit to compare relative accuracy and
confidence.
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Criteria
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Commentary
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Mineral Resource Estimate for conversion to Ore
Reserves
|
The Golpu deposit
lies in a block of deformed Upper Mesozoic to Middle Miocene
metasedimentary to sedimentary rocks cut by Miocene-Pliocene
calc-alkaline dioritic intrusives. Copper and gold mineralisation
results from a multiple intrusive porphyry system with the upper
portion overprinted by high sulphidation epithermal alteration.
Post mineral faulting has displaced and rotated the original
intrusive configuration.
The Golpu Mineral
Resource grades were estimated with Ordinary Kriging using pairwise
variograms of 10m composites for seven elements: gold, copper,
silver, molybdenum, sulphur, arsenic, and iron. The grades were
estimated into a block model with 40m x 40m x 40m parent cells with
10m x 10m x 10m resolution on domain margins. This reflects the
estimation precision available from the drillhole spacing and the
planned mining method (block caving).
The Mineral
Resource is classified based on: geological confidence as a
function of continuity and complexity of geological features; data
spacing and distribution; and estimation quality parameters
including distance to informing samples for block grade estimation.
Indicated and Inferred Mineral Resources were constrained within a
margin breakeven ‘value’ shell representing the limit
to eventual economic extraction.
The reported
Golpu Mineral Resources are inclusive of Ore Reserves.
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Site Visits
|
The Competent
Person for the Ore Reserve estimate travelled to site on the
following occasions:
● April 2015 – Site
familiarisation to confirm suitability for infrastructure and
inspect core.
● June 2016 – Inspect
progress on geotechnical drilling programme.
● June 2017 – Select a
site for the proposed Nambonga decline portal.
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Study Status
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A Feasibility
Study Update was completed in March 2018 for the development of an
underground mine comprising of three block caves (BC44, BC42 &
BC40). The Feasibility Study Update provides supporting basis for
this Ore Reserve estimate. BC44 and BC42 are at a Feasibility
confidence level, while BC40 is at a Pre-Feasibility confidence
level.
These studies
show that the mine plan is technically achievable and economically
viable taking into consideration all material Modifying
Factors.
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Cut-off Parameters
|
The Golpu Ore Reserve employs a value based cut-off determined from
the Net Smelter Return (NSR) and site operating costs based on the
outcomes of the Feasibility Study Update. The cut-off values
applied for the estimation of Ore Reserves
are:ActivityUnitsUSD(real)Development prior to first BC44 crusher
commissioningUSD/t ore milled10BC44USD/t ore milled60BC42USD/t ore
milled40BC40USD/t ore milled19.15The NSR calculation takes into
account reserve revenue factors, metallurgical recovery
assumptions, transport costs, refining charges and royalty
charges.The site operating costs include mining cost, processing
cost, relevant site general and administration costs and relevant
sustaining capital costs.
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Mining factors or assumptions
|
Estimation of the Golpu Ore Reserve involved standard steps of mine
optimisation, mine design, production scheduling and financial
modelling. Factors and assumptions have been based on numerical
modelling as well as experience and performance in similar caving
operations. The basis of the analysis is considered at Feasibility
(BC44 and BC42) and Pre-Feasibility (BC40) study levels.Preceding
Pre-Feasibility and Feasibility studies completed in 2012, 2014 and
2015 deemed block caving to be the appropriate underground mining
method to maximise the economic output of the Mineral Resource. The
Feasibility Study Update (on which this Ore Reserve statement is
based) defined a three lift block cave mine plan. Extraction levels
for the three block caves are; 4400mRL (BC44), 4200mRL (BC42), and
the 4000mRL (BC40). Geotechnical assessment during the studies has
resulted in the following key block cave mine design parameters in
the Feasibility Study Update:Mine Design ParameterValueUndercutting
StrategyAdvanced UndercutUndercut DesignW Cut with Apex
levelExtraction Level LayoutEl TenienteExtraction Spacing30m x
18mDraw Column HeightAverageBC44 320mBC42 490mBC40 590mMaximumBC44
530mBC42 805mBC40 1,120mAdditional drilling will be required to
collect further data for further geological, geotechnical and
metallurgical studies to inform final design.Grade control during
the production phase will be in the form of block cave drawpoint
sampling.The in situ grade model estimated in July 2014 was the
basis for the Ore Reserve estimate.The Feasibility Study Update
proposes the following mining approach:●Secondary/Initial
underground access via the Nambonga Decline to provide earlier and
quicker access to underground drill platforms, second means of
egress and ventilation.●Primary underground access via the
Watut Portal and the twin Watut Declines to the underground block
cave mine. The Watut Declines also form part of the primary
ventilation circuit and materials handling system conveying ore to
the Watut Process Plant.●A ‘Cave Engineering
Level’ established above the Reid Fault at 4870mRL for data
gathering, further refinement of the rock mass, monitoring of the
cave and potentially dewatering.●Ore extracted via three
block caves producing at 17Mtpa (design capacity) using an inclined
conveying system to discharge on a stockpile on the surface.The
following Modifying Factors have been applied:●All
development has mining factors for dilution and recovery applied to
accurately represent the expected mined tonnes.●Decline,
access and infrastructure shapes for BC42 and BC40 outside of the
Mineral Resource have tonnes contributing but not metal; these
tonnes are allocated to unclassified material.●PCBC™
software is used for cave production scheduling and estimation of
grade for material drawn from the block caves.The total Life of
Mine dilution is approximately 17%.The geological model is
classified as Indicated and Inferred Mineral Resources. There is no
Measured Mineral Resource. Mine plans are based on the extraction
of caving blocks solely delineated on the basis of Indicated
Mineral Resources.Ore Reserves estimates and statements are
required to include estimates of dilution. The dilution included in
the total Ore Reserve (400Mt on 100% basis) is approximately 79Mt
due to the block cave mining method. The dilution included in the
Ore Reserve contains 7% of the gold metal and 5% of the copper
metal of the Ore Reserve and does not have a material impact upon
the estimate. Even without consideration of the metal contained in
the dilution incorporated in the Ore Reserve, the economic analysis
indicates an economic Probable Ore Reserve.The Wafi-Golpu Project
is a greenfield block caving project and will require the following
mining infrastructure to support the block caves:●ventilation
fans and refrigeration equipment;●dewatering
equipment;●crushing and conveying equipment;
and●underground workshop, service and personnel
facilities.
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Metallurgical factors or assumptions
|
The ore will be
processed on site at the proposed treatment plant with a design
capacity of 17 Mtpa using conventional single stage SAG and ball
mill grinding, recycle crushing and flotation methods that are
incrementally sized to match the mining rate to produce a copper
and gold concentrate. The technology associated with the ore
processing is industry standard for this style of
deposit.
The key
metallurgical testwork for the Golpu deposit can be grouped into
five main programmes as follows:
● Testwork completed prior to
2011 on samples from above 5120mRL.
● 2012 PFS Variability testwork
and Metallurgical Domain Model completed on samples over the
vertical extent of the known Golpu deposit from 5120mRL to 3850mRL
across 14 exploration drill holes.
● 2013/14 Variability and
flowsheet development testwork from 102 composites in the 2012 PFS
programme. Variability samples were prepared from material selected
from exploration drill holes to provide spatial and grade
variability within the respective domains. The testwork samples
were obtained from 14 exploration drill holes across seven
metallurgical domains.
● 2015 Feasibility Study
testwork programme executed testwork through the chosen process
flowsheet using bulk samples from a mine plan targeting the
development of two block caves. Based on the mine development, the
ore types identified in the early years of production included
domains 29 (Sericite metasediment), domain 30 (Sericite porphyry)
and domain 33 (Actinolite porphyry) and account for 92% of material
mined within the planned block caves.
● 2018 Feasibility Study Update
testwork programme including comminution testwork to determine
milling characteristics for ore from 4000mRL. This ore is
characterised by higher work indices than the ore higher in the
orebody, thus additional work will be executed in the near future
to confirm characteristics and if necessary alter the mill
specifications during detailed design.
A total of 13
geometallurgical domains were assigned to represent an improved
geological interpretation of the Golpu deposit and increase the
understanding of the copper and gold recoveries in the deposit.
Gold and copper recoveries are calculated for each domain. The
geometallurgical domains are based upon 103 composite samples
assembled from 17 exploration drillholes through the entire
deposit. Life of Mine metallurgical recoveries are:
● Gold 68%
● Copper 95%
Final concentrate
derived from the testwork was utilised to conduct a product quality
assessment, which incorporated chemical analysis for major elements
and potential deleterious elements. The analysis indicated that the
levels of deleterious elements in concentrate did not exceed any of
the typical concentration restrictions for sale.
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Environmental
|
Feasibility study
level analysis is in progress assessing the potential environmental
impacts of the mining and processing operations required for the
mining of the Golpu deposit and an Environmental Impact Statement
is proposed to be submitted by the WGJV to the PNG government by
the end of June 2018.
NAF (Non-Acid
Forming) waste rock would be produced from the first 300m of the
Nambonga Decline and the first 2,000m of the twin Watut Declines.
This material would be used to construct the retaining wall, base
and access road for the PAF (Potentially Acid Forming) cells. PAF
would be expected to be encountered from below these points for the
remaining scope of the mine. This material will either be stored in
cells encapsulated in impervious material or treated via the
processing plant.
Deep Sea Tailings
Placement (DSTP) has been identified in the Feasibility Study
Update as the preferred method for tailings
management.
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Infrastructure
|
The Wafi-Golpu
Project is a greenfield project and currently does not have
infrastructure to support mining operations. Major Infrastructure
is required and included in the Feasibility Study Update,
including:
● access road;
● ventilation and refrigeration
plant;
● processing plant (copper
concentrator);
● Deep Sea Tailings Placement
system including tailings pipeline from site to the discharge point
near Lae;
● concentrate export pipeline
plus associated dewatering and loading facilities at the existing
Lae Port;
● accommodation camp;
and
● on site power
station.
The land in which
the Project is located is mostly under customary land title, some
of which has been in dispute between customary land title holders
since mineral exploration began in the early 1980s. The
compensation of landholders is a requirement to the start of work
however, Section 160 of the Mining
Act 1992 means that a dispute between customary land title
holders of this nature will not impede Project
execution.
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Costs
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Capital and
Operating costs have been determined as part of the Feasibility
Study Update.
Capital cost
estimates are based on multiple market prices across all technical
disciplines. Provision has been made for capital expenditure
requirements for new equipment, infrastructure and replacement of
infrastructure and equipment during the life of the mine.
Contingency has also been factored into the capital cost estimate
consistent with the level of accuracy of the study.
Operating cost
estimate first principles cost modelling expenses have been
quantified as far as possible and where practicable supported by
quotations.
Long term metal
prices and exchange rate assumptions adopted in the Ore Reserve
estimate are the WGJV approved long term assumptions for the
Project.
No cost impact is
expected from deleterious elements. It has therefore not been
necessary to include realisation penalties (additional costs)
relating to minor elements when preparing the Ore Reserve
estimate.
Transport and
refining charges have been based on forecast supply and demand
assumptions.
The following
allowances have been made for royalties payable in the preparation
of the Ore Reserve estimate:
● Royalty of 2.00% of net
smelter revenue (i.e. gross revenue from all mining sales adjusted
for realisation and freight charges).
● Mining Levy of 0.25% of gross
revenue from all mining sales.
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Revenue factors
|
Long term metal
prices and exchange rate assumptions adopted in the Ore Reserve
estimate are the WGJV approved long term assumptions for the
Project and are:
● USD1,200/oz for
gold
● USD3.00/lb for
copper
● USD/AUD 0.75
● PGK/USD 3.10
The NSR
calculation takes into account reserve revenue factors,
metallurgical recovery assumptions, transport costs and refining
charges and royalty charges.
Metallurgical
test work analysis has indicated that the levels of deleterious
elements in concentrate did not exceed any of the typical
concentration restrictions for sale.
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Market assessment
|
Third party
forecasts were used in the Feasibility Study Update (noting that
this information is commercial in confidence).
The Wafi-Golpu
Project’s natural market for concentrate is Asia due to the
proximity of the mine to Asian region smelters.
The Wafi-Golpu
Project is expected to achieve first ore milled approximately 4.75
years post SML grant. At such time, the Wafi-Golpu Project may face
competition from both new and established mines.
Concentrate
volume forecasts were derived from the Feasibility Study Update
production schedule.
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Economic
|
The Ore Reserve
has been evaluated through a financial model. All operating and
capital costs as well as revenue factors stated in this document
were included in the financial model. A discount factor of 8.5%
real was applied. This process demonstrated the Golpu Ore Reserve
to have a positive NPV.
Sensitivities
were conducted on the key input parameters including commodity
prices, capital and operating costs, ore grade, discount rate,
exchange rate and recovery which confirmed the estimate to be
robust. The NPV range has not been provided as it is commercially
sensitive.
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Social
|
To assess the
social and economic impacts of the Project upon communities, the
Feasibility Study Update included an in depth Social and Cultural
assessment, including leveraging off historical assessment work
completed. In addition an assessment of the potential economic
impacts of the Project (if developed) was undertaken by
WGJV.
The land in which
the Project is located is mostly under customary land title, some
of which has been in dispute since mineral exploration began in the
early 1980s. The compensation of landholders is a requirement to
the start of work however, Section 160 of the Mining Act 1992 means that a dispute of
this nature will not impede Project execution.
Other key
agreements that will be required for project development include:
the Memorandum of Agreement (a Development Forum process) in
relation to benefits that might be accrued to effective landholders
and a Mining Development Contract with the Independent State of
PNG.
The respect for
all landowners, and regular engagement with them, will be vital to
the maintenance of a social licence to operate.
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Other
|
A Level 2B
Environment Permit (EP) has been granted for exploration
activities.
Applications for
a Special Mining Lease (SML) and related ancillary tenements have
been submitted by WGJV to the Mineral Resources
Authority.
Approval of the
Project by the PNG Government will be founded on the assessment of
the Environmental Impact Statement (EIS) due to be submitted by the
WGJV to the PNG government by the end of June 2018. This EIS will
inform government’s decision to grant an SML, related
ancillary tenements and a Level 3 EP. The grant of these key
instruments is a prerequisite for execution of the
Project.
The Golpu deposit
is located in a seismically active area in a region close to a
source of earthquakes that can produce seismic accelerations at the
site. This risk has been taken into account in infrastructure and
mine design.
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Classification
|
The Ore Reserve
classification is based on Indicated Mineral Resources only. No
Measured Mineral Resources are stated for this deposit. This
classification is based on geological confidence as a function of
continuity and complexity of geological features; data spacing and
distribution and estimation quality parameters including distance
to informing samples for block grade estimation.
Diluting material
has been included within the Probable Ore Reserve as mined dilution
due to the non-selective nature of block cave mining. This
represents 7% of the gold metal and 5% of the copper metal in the
Ore Reserve. Even without consideration of the metal contained in
the dilution incorporated in the Ore Reserve, the economic analysis
indicates an economic Probable Ore Reserve.
It is the
Competent Person’s view that the classifications used for the
Ore Reserves are appropriate.
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Audits or reviews
|
SRK Consulting
(Australasia) Pty Ltd (SRK) was commissioned to conduct an
independent review of the mining section of the Feasibility Study
Update, which included the Ore Reserve estimation processes and
results.
SRK concluded
that the Ore Reserve estimates had been prepared using normal
industry practice and has been appropriately classified as Probable
Ore Reserve. SRK did not identify any material issues with the
estimate.
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Discussion of relative accuracy/ confidence
|
The accuracy of
the estimates within this Ore Reserve is mostly determined by the
order of accuracy associated with the Mineral Resource
model.
BC44 and BC42 are
at a Feasibility confidence level (+/-15% accuracy), while BC40 is
at a Pre-Feasibility confidence level (+/- 25%
accuracy).
The Competent
Person views the Golpu Ore Reserve a reasonable assessment of the
global estimate.
The remaining
areas of uncertainty at the current study stage are with the
geotechnical parameters for the mining area below 4200mRL (i.e.
BC40) that has been investigated to a Pre-Feasibility Study (PFS)
level of confidence and is constrained by an incomplete set of
orebody data with rock strength only being confirmed in the north
east quadrant of the planned BC40 footprint. An analysis has
indicated that based on the known rock strength being extrapolated
across the remaining areas of lower orebody knowledge, mining is
feasible. The Modifying Factors (key inputs) applied within
PCBC™ cave scheduling software relies upon geology and
geotechnical data such as structural geology and rock mass
strength.
Further orebody
data is required to confirm the geological and geotechnical
information and is planned as part of the Forward Works
Programme.
Golpu is a
greenfields site and there is no previous production from the Golpu
deposit to compare relative accuracy and confidence.
|
Lauren Fourie
+27 (0)71 607 1498
lauren.fourie@harmony.co.za
|
Marian van der Walt
+27 (0)82 888 1242 Marian@harmony.co.za
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Harmony Gold Mining Company
Limited
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Date: April 12,
2018
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By:
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/s/ Frank Abbott
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Name
Frank
Abbott
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Title
Financial
Director
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