Xstrata has approved a $122m feasibility study for its Frieda River copper-gold project in Papua New Guinea, a joint venture with Highlands Pacific.

A pre-feasibility study noted that the project could support an annual production rate of 246,000t of copper and 379,000oz of gold during the first eight years.

Xstrata will have to produce the feasibility study by January 2012 to retain its 81.82% interest and management rights in the project, while Highlands Pacific is free carried until the completion of the study.

Highlands Pacific managing director John Gooding said an updated mineral resource estimate for the project is expected by December, which will include the results from more than 38,000m of diamond drilling and 111 drill holes completed during 2010.