NEWCREST Mining says it expects to cut costs by splitting the development plan for a major offshore project into two stages.
The Melbourne-based gold mining heavyweight says it is planning to target the higher value part of the ore body in the first stage of the Golpu gold and copper project.
A pre-feasibility study for stage two of the project, in Papua New Guinea, will be updated.
The estimated capital outlay for the first stage over the life on the mine is $US3.1 billion ($3.8 billion).
A joint venture project with Harmony Gold Mining, Golpu was originally forecast to cost $US4.8 billion.
“By targeting the high value core of the ore body first, we have increased the economic returns from the mine by being cash flow positive earlier in the life of the mine,” chief executive Sandeep Biswas said.
“Progressing stage one to the feasibility study stage aligns with Newcrest’s strategy of profitable growth through low-cost operations.”
Both the stage one feasibility study and stage two pre-feasibility study are expected to be updated by the end of the month. Production at stage one is forecast to begin in 2020, with annual output expected to peak at 320,000 ounces of gold and 150,000 tonnes of copper in 2025.
Production for the original project was forecast to peak at 550,000 ounces of gold and 330,000 ounces of copper.
The Golpu deposit forms part of the Wafi-Golpu project, 65km from Lae.
The PNG Government has an option to take a 30 per cent stake in the project, which would reduce Newcrest and Harmony’s 50 per cent shares to 35 per cent.
Newcrest shares closed down 5c at $10.67 on Monday — a performance marginally better than the wider market.
Shares in the group were trading at about $8.60 early last month but have climbed in line with the gold price, which is finding favour as a safe haven while other commodity prices broadly slide.
Gold was trading at $US1216.92 an ounce on Monday, compared with less than $US1150 early last month.