NEWCREST MINING Market Release
25 January 2023
Lihir Phase 14A Feasibility Study unlocks value with upside potential
- Feasibility Study demonstrates attractive financial returns and a 2.9 year payback1,2,3
- Incremental ~400koz of Phase 14A gold production expected over the next 4 years1,4,5
- Study work underway to apply steep wall mining in the north and east of the Kapit orebody, with the potential to extend the elevated production profile beyond FY31
- Enhanced operational flexibility and risk management with an additional ore source
- Phase 14A mining progressing well with higher grade ore expected to be delivered from FY245
Newcrest Mining Limited (ASX, TSX, PNGX: NCM) is pleased to announce that the Newcrest Board has approved the Lihir Phase 14A Feasibility Study (the Study), endorsing the project into full implementation.
As part of the Study, site investigation and trial works have been completed and a robust plan has been developed which extends the Phase 14 cutback and safely steepens the walls of the pit utilising civil engineering techniques. Completion of a drilling program has significantly improved the geotechnical knowledge of the cutback area and enabled refinement of the anchor design and placement to better suit the geotechnical conditions.
Newcrest Interim Chief Executive Officer, Sherry Duhe, said "The development of Phase 14A is another innovative step forward in realising the full potential of Lihir. The findings of the Study are expected to deliver gold production from an additional high grade ore source which would have otherwise been inaccessible through standard mining techniques.
"The Study outlines an updated life of mine plan, with upside potential. The application of steep wall technologies, together with an alternative, lower cost and simpler seepage barrier design have the potential to enable access to additional high grade zones outside the current Ore Reserve and extend the elevated production profile beyond FY31.
"Our team continues to work diligently to maintain a strong focus on capital discipline, placing several recovery improvement capital projects on hold that currently do not meet our investment criteria. The Phase 14A ore zone is now well informed by geotechnical drilling that underpins the design and stability of the cutback and we expect Phase 14A to be delivering higher grade ore from FY24," said Ms Duhe.
Summary of Study Findings1,6,7
- Estimated total capital expenditure on a real basis of ~$280 million and a nominal basis of ~$296 million
- Internal Rate of Return (IRR) of 48%2 (real, after tax, excluding sunk costs of $71 million)
- Payback of 2.9 years2,3
- Net Present Value (NPV) of $202 million2
- FY23 to FY26 incremental Phase 14A gold production of ~400koz4
- Life of Mine (LOM) incremental Phase 14A gold production of ~800koz8
Newcrest Mining Limited - Level 8, 600 St Kilda Road, Melbourne - www.newcrest.com | 1 |
Through the Early Works program, mining of Phase 14A commenced in the June 2022 quarter and will continue through to FY27. Ore mined from Phase 14A will displace lower grade ore feed to the processing plant, with ~13Mt4 of high and medium grade ore from Phase 14A expected to be fed through to FY26 to produce an incremental ~400koz of gold4. Lower grade material will be stockpiled and fed progressively over the remaining mine life.
Further application of the civil steep slope technology used in Phase 14A is being assessed to potentially unlock additional high grade mineralisation outside the current Ore Reserve in the northern and eastern extents of the Kapit orebody. This work has the potential to improve the production profile beyond FY31, before the high grade ore from Kapit declines. The design optimisation and associated impact on the longer term production profile is expected to be completed in the second half of CY20235.
In addition, following completion of the Seepage Barrier Feasibility Study in October 2021, an alternative seepage barrier design, the Nearshore Soil Barrier (NSB) option, is currently being studied. The NSB would sit between the No Coffer Dam limit and the existing shoreline of the Inner Harbour, approximately 500m west of the proposed Kapit Seepage Barrier (KSB). Initial work indicates that the NSB would be a simpler solution, faster to construct and less costly. A Pre-Feasibility Study (PFS) level assessment of the NSB option is currently underway and is expected to be completed in CY20235.
The Study production profile has been updated, with mill throughput rates revised to incorporate increased ore hardness based on an improved geometallurgical understanding. Mill operating time has been revised to reflect current mill performance with a more progressive ramp up in improvement. Options to increase throughput rates continue to be assessed going forward. Recovery assumptions have also been adjusted, with several recovery improvement capital projects no longer meeting Newcrest's investment criteria following the inclusion of cost inflation pressures into estimates. These projects have been placed on hold and will continue to be assessed for potential inclusion into the mine plan at a later date.
Table 1: Key Phase 14A Study Findings1,6
Study Outcomes | ||||
Area | Measure | Unit | Phase 14A2 | LOM9,14,15 |
Ore milling rate (max) | Mtpa | 6.0 | 14.6 | |
Ore milling rate (average) | Mtpa | 2.8 | 14.0 | |
Ore milled | Mt | 13.24,10 / 20.28 | 308 | |
Production | Life | Years | 511 | 22 |
Ore mined | Mt | 20.2 | 247 | |
Average gold grade mined | g/t | 2.4 | 2.3 | |
Gold produced | Moz | 0.8 | 18 | |
Average gold recoveries | % | 79 | 81 | |
Non-sustaining production stripping (capitalised) | US$m (real) | 37 | ||
Capital | Non-sustaining capital | US$m (real) | 243 | |
Total capital | US$m (real) | 280 | ||
NPV7 | US$m | 202 | ||
Financials | IRR | % (real) | 48 | |
Payback period3 | Years | 2.9 |
Increases to capital costs included in the Study are largely driven by the reallocation of ground support costs from operating costs to non-sustaining capital. These impacts and other key changes in cost assumptions from the PFS are outlined below.
Newcrest Mining Limited - Level 8, 600 St Kilda Road, Melbourne - www.newcrest.com | 2 |
Economic assumptions
Financial outcomes outlined in Table 1 are based on the following gold price assumptions:
Gold price | US$/oz real |
FY231,750
FY241,650
FY251,550
FY261,550
FY27+1,500
Phase 14A Overview1,5
In October 2021, Newcrest announced the findings of the Phase 14A PFS and the commencement of the Study and Early Works Program. Phase 14A represents an extension of the Phase 14 cutback that involves safely steepening the walls of the pit by utilising civil engineering techniques to access existing Indicated Mineral Resources which would have otherwise been inaccessible through standard mining techniques.
Phase 14A provides an additional high grade ore source that will displace low grade stockpile feed that is required as the mine moves through the transitional zone (Phases 16 and 17) between the Lienitz pit and the high grade Kapit pit (Phases 18 and 19) between FY23 and FY27.
Figure 1: Lihir Mine cutbacks including Phase 14A
Newcrest Mining Limited - Level 8, 600 St Kilda Road, Melbourne - www.newcrest.com | 3 |
The Early Works Program has involved investment in civil works and mining fleet, and establishment of the initial Phase 14A benches. Mining commenced in the June 2022 quarter and is planned to continue through to FY27. This is expected to deliver:
- Total ex-pit mining of 35Mt8, including 13Mt4 of high and medium grade ore at an average of 3g/t, which will displace lower grade stockpile ore that would otherwise have been processed in the mill during this time
- An uplift in the total mill feed grade and an incremental ~500koz of gold in feed and ~400koz gold produced over the FY23 to FY26 period4,12
Material Class | Tonnage (Mt) | Au Grade (g/t) |
High Grade (HG) | 4.6 | 4.5 |
Medium Grade (MG) | 8.3 | 2.2 |
Low Grade (LG) | 7.3 | 1.3 |
Waste | 14.6 | |
Total | 34.8 | |
Stripping Ratio (Waste: Ore) | 0.72 |
Table 2: Phase 14A Inventory Summary8
At the completion of Phase 14A mining, the high wall is expected to be buttressed with backfill to provide long term stability. The buttressing results in the sterilisation of around 550koz of contained low grade gold at the bottom of Phase 21 which would have otherwise been mined from 2032.
Phase 14A FY Mining Tonnage
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
-
2023 | 2024 | 2025 | 2026 | 2027 |
HG | MG | LG | Waste |
Figure 2: Phase 14A expected mining ore production by financial year8
A key objective of the Study was to improve the confidence of the civil design through a drilling program along with trial installations of the ground anchors. The drilling program has significantly improved the geotechnical knowledge of the cutback and has enabled refinement of the Study design to improve overall stability and reduce project risk.
The ground anchors will be installed in the upper benches of the cutback to support the steeper wall angles in these areas. The slope angles of the lower benches will be similar to the existing walls in Phase 14. The upper Argillic horizons without ground support typically have an unsupported slope angle of ~45° which has been increased to ~68° using ground anchors. The improved geotechnical knowledge has enabled the Study design to reduce slope angles from ~77% in the PFS whilst improving overall stability.
Newcrest Mining Limited - Level 8, 600 St Kilda Road, Melbourne - www.newcrest.com | 4 |
Figure 3: Phase 14A design showing current vs supported design slopes
The soil anchors provide ground support in the form of multi-strand anchors with shotcrete and/or high tensile wire mesh as face support in the Argillic and upper Epithermal zones. Backfilling the cutback will occur after the completion of mining and will act as a buttress supporting long-term stability of the highwall.
Figure 4: Phase 14A wall stabilisation design
Expit Mining to 55Mtpa9,14,15
The Lihir gold production schedule forecasts mining rates to increase up to 55Mtpa over the coming years. Ore from Phase 14A is expected to be mined between FY22 and FY27 with high grade ore fed directly to the mill while the lower grade ore will be processed over the LOM.
Mining rates for Lihir are expected to continue to increase over the coming years through a combination of equipment capacity and mining efficiency projects. Additional mining capacity has been delivered following a program of truck re-builds and the replacement of primary dig units completed in FY22. In combination with a maintenance excellence program, mechanical availability has increased to 84% from 79% over the last 12 months.
Newcrest Mining Limited - Level 8, 600 St Kilda Road, Melbourne - www.newcrest.com | 5 |
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Newcrest Mining Limited published this content on 25 January 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 January 2023 22:29:14 UTC.
