Newcrest Mining and Harmony Gold Mining Company have entered a memorandum of understanding (MoU) with the Government of Papua New Guinea (PNG) over the development of the Wafi-Golpu gold mine located in the country’s Morobe Province.

The project is being developed as a 50-50 joint venture between Newcrest and Harmony. It is subject to the finalisation of the permitting process and the approval of both companies’ boards.

Newcrest noted that the agreement affirms the commitment of the project partners and the government to go ahead with the Wafi-Golpu project.

The parties expect to complete the permitting process for the project and secure a special mining lease by 30 June next year.

Once approvals are secured, Newcrest and Harmony will begin a work programme, which includes the establishment of underground access for further drilling of the Golpu deposit and the construction of a bridge over the Markham River.

“This MoU builds on that progress and captures our joint understanding of the terms and timeline that we are working towards.”

Newcrest Mining managing director and CEO Sandeep Biswas said: “We have been working constructively with the Government of Papua New Guinea to progress permitting of the Project and recently achieved key milestones in this process with completion of our Feasibility Study Update in March 2018 and Environmental Impact Statement in June 2018.

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“This MoU builds on that progress and captures our joint understanding of the terms and timeline that we are working towards.”

The Wafi-Golpu project development was previously expected to cost around $2.65bn to bring the mine to commercial production as per a 2016 pre-feasibility study. However, in the feasibility study update in March this year, the expected development cost increased to $2.8bn.

Newcrest reduced the total life-of-project cost estimate by $1bn to $5.3bn from $6.3bn.

Deep drilling at the project began in 2008. The Wafi-Golpu is expected to have an average annual copper production of 161kt and an average annual gold production of 266koz.