Study puts expansion cost for Porgera at $660 million

Studies are complete for a staged expansion of the Porgera gold mine project in Papua New Guinea, taking into account an increase in the capital cost of the project and higher total production of gold. Placer Dome (TSE), which has a 22.7% interest in Porgera through its 75.8% owned subsidiary Placer Pacific, said construction of a first- stage underground mine and 1,650- ton-per-day concentrator are well advanced toward completion in the third quarter of this year. The capital cost of this stage is estimated to be $660 million, which includes much of the infrastructure associated with the total project.

The Porgera mine optimization studies, which will be reviewed with the government of Papua New Guinea, are aimed at a phased expansion of this plant to 8,800 tons per day. Placer Dome expects to produce an extra 2.3 million oz. gold as a result of this expansion, based on a recent increase in recoverable reserves.

Placer Dome said the studies confirm an average production of 800,000 oz. of gold per year over the first six years of operation. This calculation is based on estimated reserves of 66.2 million tons at an average grade of 0.19 oz. gold per ton if a cutoff of 0.044 oz. per ton is used.

The major company said increases in capital costs at Porgera — estimated to be about 25% above those projected in the May, 1988, feasibility study — reflect a general escalation of costs, unexpected changes relating to land compensation and infrastructure requirements, and timing differences associated with a phased expansion.

The most recent construction activities on site involved earthworks for plant construction, upgrading of the road from the coast to the inland site, and relocation and housing of local people.