Harmony Gold Mining Co. (ADR) (NYSE:HMY) has released a report on its Golpu copper-gold Papua New Guinea. According to the report, the company expects the annual production to increase by about 45% to 500,000 ounces.
These finding were derived from a feasibility study that confirmed a healthy investment future for the company’s projects. The South Africa based company produced 1.1 million ounces of gold in the period ended last June 30. According to the report, the first stage of the company’s project is expected to realize an internal rate of return of 16% and will also be flexible enough to withstand the rapid changes in metal prices. This finding is based on the price of gold of $1,200 per ounce, and $3 per a pound of copper.
Harmony Gold Mining Bright Future
On February 15, gold traded at $1219.21 an ounce while copper stood at $2.08 per pound in London. Golpu is co-owned by Harmony and the Melbourne based Newcrest Mining. The feasibility study further showed that Harmony’s share of resources to contain close to 5.5 million ounces while copper was about 2.4 million metric tons.
The company further intends to fund its mines development, with its operating profits for the next 4 years after which they will raise $250 million from external financing for the next 3 years.
The report was based on the Golpu Stage 1 Feasibility 1 and Stage 2 Prefeasibility studies. The findings of the feasibility study 2 include:
- Lower operating cost to withstand low fluctuating commodity prices and guarantee high returns during high market price.
- The Ore Reserve as end 2015 was estimated to have 5.5 million ounces of gold as well as 2.4 million tonnes of copper.
- Project de-risked without any significant deviation from the stage 1 prefeasibility study economic predictions as well as the technical recommendations.
- The Golpu project is subject to “staged development” which allows for the optimization of capital efficiency and at the same time progressively de-risk the project before any further investments.
The CEO, Peter Steenkamp termed Golpu porphyry as a world class resource considering its size, quality grades, long life, as well as its low operating cost.