NCMGF - Newcrest Mining Limited - Havieron PFS Stage 1 Delivers Base for Future Growth
- Havieron PFS Stage 1 estimated IRR of 16% with a 4 year payback period1,2,3,4
- Estimated average gold production of 160kozpa @ AISC of US$743/oz over initial 9 year mine life from a ~2Mtpa operation1,2,3
- Capital efficient, low intensity development utilising existing Telfer processing infrastructure
- PFS based on Ore Reserves of 14Mt and does not consider 37Mt of Inferred Mineral Resource
- The Study identified that including additional Mineral Resources could allow for a ~3Mtpa operation
- The Feasibility Study underway will also assess production rates of 3Mtpa and beyond
- Significant exploration upside, with recent drilling showing the deposit open laterally and at depth
- Completion of PFS triggers Newcrest's entitlement to an additional 10% interest in Havieron
- Feasibility Study expected to be completed in the December 2022 Quarter5
Melbourne, Australia--(Newsfile Corp. - October 11, 2021) - Newcrest Mining Limited (ASX: NCM) (TSX: NCM) (PNGX: NCM) is pleased to announce that the Havieron Pre-Feasibility Study Stage 1 (the Study) has been completed and the Newcrest Board has approved the progression of the Study to the Feasibility Stage.
The Havieron Project (the Project) is located 45km east of Newcrest's existing Telfer operation and is a high grade, low capital intensity project with significant expansion potential. Newcrest has adopted a staged approach to the evaluation and development of Havieron aiming to deliver early production and cash flows from the project while work continues to define potential resource additions and assess growth targets. The benefit of existing processing capacity at Telfer and ongoing definitional drilling highlights the clear potential for a larger scale operation that will be further assessed during the Feasibility Stage.
Newcrest Managing Director and Chief Executive Officer, Sandeep Biswas, said "It is an incredible achievement that, within two years of starting the Havieron drilling program, we have been able to deliver this significant project milestone and demonstrate financial returns that comfortably exceed our hurdle rate, even in this first stage. The Pre-Feasibility Study underpins an initial Ore Reserve estimate for the upper section of the South East Crescent Zone which increases our confidence in achieving first production in FY24 and triggers our entitlement to a cumulative 70% Joint Venture interest."
"We believe that this is just the first stage of a bright and profitable future for Havieron. Our extensive drilling program continues to assess the extent of the South East Crescent Zone and further test the Northern and Eastern Breccia for mineralisation which may be suitable for bulk mining methods. We have recently delivered several new and exciting high grade intercepts which extend the high grade mineralisation beneath the initial Mineral Resource estimate and highlights the potential for further resource growth".
"Notably, the Study assumes that Havieron is the sole ore feed for the Telfer plant and does not assume any potential upside from the extension of Telfer's mine life beyond FY24. We continue to assess the potential for further open pit and underground opportunities at Telfer to extend its life and supplement production from Havieron in FY24 and beyond" said Mr Biswas.
Summary of Study Findings (in 100% terms)1,2,3
- Initial Ore Reserve estimate:
- 14Mt @ 3.7 g/t Au and 0.54% Cu for 1.6Moz Au and 73kt Cu6
- Low-cost production in a Tier 1 jurisdiction, with further upside
- Life of Mine (LOM) average annual gold production of 160koz and copper production of 6.9kt
- PFS based on Ore Reserves of 14Mt and does not consider 37Mt of Inferred Mineral Resource
- LOM average All-In Sustaining Cost (AISC) of A$990/oz (US$743/oz)
- Attractive investment opportunity
- Estimated total capital expenditure of A$529 million (US$397 million)7,8
- Internal Rate of Return (IRR) of 16% (real, after tax)
- Payback of 4 years from first commercial production4
- Net Present Value (NPV) of A$304 million (US$228 million)9
- Uses Newcrest's existing milling and support infrastructure at Telfer to process and treat Havieron ore
- Demonstrates the value that this strategic infrastructure can provide to the Project
- The Study assumes that Havieron is the sole ore feed for the Telfer plant and does not assume any potential upside from the extension of Telfer's mine life beyond FY24
- Newcrest is assessing the potential for further open pit and underground opportunities at Telfer to extend its life and supplement production from Havieron in FY24 and beyond
- Growth optionality
- Potential to expand the Project and increase the mining rate to 3Mtpa or more through the inclusion of areas of the Inferred Mineral Resource that are currently subject to an infill drilling program
- Potential to lower mining costs by considering alternative, higher production rate, mining methods
- Ongoing growth drilling continues to show potential for resource additions outside of the existing Inferred Mineral Resource boundaries
The Havieron Project is located on the traditional lands of the Martu people who hold exclusive possession native title rights to 130,000km2 of country in the Western Desert. The Indigenous Land Use Agreement with Western Desert Land Aboriginal Corporation, centred on the Telfer mine, extends to the Havieron project.
The Project is operated by Newcrest under a Joint Venture Agreement with Greatland Gold plc (Greatland Gold). Completion of this Pre-Feasibility Study triggers Newcrest's entitlement to an additional 10% interest in the Joint Venture for a cumulative 70% Joint Venture interest. Newcrest has an option to acquire an additional 5% Joint Venture interest for fair market value, exercisable during the 12 months from 12 December 2021.
The Havieron Feasibility Study is expected to be completed in the December 2022 Quarter5.
Table of Key Study Findings (100% terms)1,2,3,[10]
| Area |
| Measure |
| Unit |
| Study Outcomes |
| Production |
| Ore milled / milling rate (max) |
| Mtpa |
| 2.1 |
| LOM |
| Years |
| 9 |
| Ore mined (LOM) |
| Mt |
| 14 |
| Average gold grade (LOM) |
| g/t |
| 3.72 |
| Average copper grade (LOM) |
| % |
| 0.54 |
| Gold produced (LOM) |
| koz |
| 1,432 |
| Copper produced (LOM) |
| kt |
| 62 |
| Average annual gold production (LOM) |
| koz |
| 160 |
| Average annual copper production (LOM) |
| kt |
| 6.9 |
| Capital |
| Project capital7,8 |
| A (real) |
| 529 |
| Operating |
| Total operating cost (LOM)[11] |
| A$/t (real) |
| 112 |
| AISC (LOM) |
| A$/oz sold |
| 990 |
| Economic assumptions |
| Gold price |
| US$/oz |
| 1,500 |
| Copper price |
| US$/lb |
| 3.30 |
| AUD:USD exchange rate |
| 0.75 |
| Financials |
| NPV9 |
| A (real) |
| 304 |
| IRR |
| % (real) |
| 16 |
| Payback period4 |
| Years |
| 4 |
| Free cash flow generation (LOM) (post tax) |
| A (real) |
| 531 |
Key milestones5
| Milestone Activity |
| Estimated Date |
| Sampling techniques |
| Core samples are obtained from core drilling in Proterozoic basement lithologies. PQ-HQ and NQ diameter core was drilled on a 6m run. Core was cut using an automated core-cutter and half core sampled at 1m intervals with breaks for major geological changes. Sampling intervals range from 0.2 - 1.0m. Cover sequences were not sampled. |
| Drilling techniques |
| Permian Paterson Formation cover sequence was drilled using mud rotary drilling. Depths of cover typically observed to approximately 420m vertically below surface. Steel casing was emplaced to secure the pre-collar. Core drilling was advanced from the base of the cover sequence with PQ3, HQ3 and NQ2 diameter coring configuration. Core from inclined drill holes are oriented on 3m and 6m runs using an electronic core orientation tool (Reflex ACTIII). At the end of each run, the bottom of hole position is marked by the driller, which is later transferred to the whole drill core run length with a bottom of hole reference line. |
| Drill sample recovery |
| Core recovery is systematically recorded from the commencement of coring to end of hole, by reconciling against driller's depth blocks in each core tray with data recorded in the database. Drillers depth blocks provided the depth, interval of core recovered, and interval of core drilled. Core recoveries were typically 100%, with isolated zones of lower recovery. Cover sequence drilling by the mud-rotary drilling did not yield recoverable samples. |
| Logging |
| Geological logging recorded qualitative descriptions of lithology, alteration, mineralisation, veining, and structure (for all core drilled - 100,799m from 170 drillholes, all intersecting mineralisation), including orientation of key geological features. Geotechnical measurements were recorded including Rock Quality Designation (RQD) fracture frequency, solid core recovery and qualitative rock strength measurements. Magnetic susceptibility measurements were recorded every metre. The bulk density of selected drill core intervals was determined at site on whole core samples. All geological and geotechnical logging was conducted at Havieron site. Digital data logging was captured on diamond drill core intervals only, and all data validated and stored in an acQuire database. All drill cores were photographed, prior to cutting and/or sampling the core. The logging was of sufficient quality to support the Mineral Resource estimate. |
| Sub-sampling techniques and sample preparation |
| Sampling, sample preparation and quality control protocols are considered appropriate for the material being sampled. Core was cut and sampled at the Telfer and Havieron core processing facility. Half core samples were collected in pre-numbered calico bags and grouped into bulk bags for dispatch to the laboratory. Sample weights typically varied from 0.5 to 4kg. Sample sizes are considered appropriate for the style of mineralisation. Drill core samples were freighted by air and road to the laboratory. Sample preparation was conducted at the independent ISO17025 accredited Intertek Laboratory, Perth (Intertek). Samples were dried at 105oC, and crushed to 95% passing 4.75mm, and the split to obtain up to 3kg sub-sample, which was pulverised (using LM5) to produce a pulped product with the minimum standard of 95% passing 106?m. Routine grind size analysis is conducted. Duplicate samples were collected from crush and pulp samples at a rate of 1:20. Duplicate results show an acceptable level of variability for the material sampled and style of mineralisation. Periodic size checks (1:20) for crush and pulp samples and sample weights are provided by the laboratory and recorded in the acQuire database. |
| Quality of assay data and laboratory tests |
| Assaying of drill core samples was conducted at Intertek. All samples were assayed for 48 elements using a 4-acid digestion followed by ICP-AES/ICP-MS determination (method 4A/MS907), which is considered to provide a total assay for copper. Gold analyses were determined by 50g fire assay with AAS finish (method FA50N/AA), which is considered to provide a total assay for gold. Sampling and assaying quality control procedures consisted of inclusion of certified reference material (CRMs), coarse residue and pulp duplicates with each batch (at least 1:20). Assays of quality control samples were compared with reference samples in acQuire database and verified as acceptable prior to use of data from analysed batches. Laboratory quality control data, including laboratory standards, blanks, duplicates, repeats and grind size results are captured in the acQuire database and assessed for accuracy and precision for recent data. Extended quality control programs including pulp samples submitted to an umpire laboratory and combined with more extensive re-submission programs have been completed. Analysis of the available quality control sample assay results indicates that an acceptable level of accuracy and precision has been achieved and the database contains no analytical data that has been numerically manipulated. The assaying techniques and quality control protocols used are considered appropriate for the data to be used for estimation of Mineral Resources. |
| Verification of sampling and assaying |
| Sampling intervals defined by the geologist are electronically assigned sample identification numbers prior to core cutting. Corresponding sample numbers matching pre-labelled calico bags are assigned to each interval. All sampling and assay information were stored in a secure acQuire database with restricted access. Electronically generated sample submission forms providing the sample identification number accompany each submission to the laboratory. Assay results from the laboratory with corresponding sample identification are loaded directly into the acQuire database. Assessment of reported significant assay intervals was verified by re-logging of diamond drill core intervals and assessment of high-resolution core photography. The verification of significant intersections has been completed by company personnel and the Competent Person. No adjustments are made to assay data, and no twinned holes have been completed. There are no currently known drilling, sampling, recovery, or other factors that could materially affect the accuracy or reliability of the data. |
| Location of data points |
| Drill collar locations were surveyed using a differential GPS with GNSS with a stated accuracy of +/- 0.5m for all drill holes used. Drill rig alignment was attained using an electronic azimuth aligner. Downhole survey was collected at 6-12m intervals in the cover sequence, and every 6 to 30m in diamond drill core segments of the drill hole using single shot (Axis Mining Champ Gyro). The single shot surveys have been validated using continuous survey to surface (Axis Mining Champ) along with a selection of drill holes re-surveyed by an external survey contactor using a DeviGyro tool - confirming sufficient accuracy for downhole spatial recording. A LIDAR survey was completed over the project area in November 2019 which was used to prepare a DEM / topographic model for the project with a spatial accuracy of +/- 0.1m vertical and +/- 0.3m horizontal. The topography is generally low relief to flat, elevation within the dune corridors in ranges between 250-265m Australian Height Datum (AHD) steepening to the southeast. All collar coordinates are provided in the Geocentric Datum of Australian (GDA20 Zone 51). All relative depth information is reported in AHD +5000m. |
| Data spacing and distribution |
| The drill hole spacing ranges from 40-100m within the SE Crescent Zone to 50-200m in lateral extent within the breccia zones over an area of ~2km2. The data spacing is sufficient to establish the degree of geological and grade continuity for an Indicated Mineral Resource and Inferred Mineral Resource within SE Crescent Zone and Inferred Mineral Resource within the Breccia zones. Significant assay intercepts remain open. Further drilling is required to determine the extent of currently defined mineralisation. No sample compositing is applied to samples. Drilling intersects mineralisation at various angles. |
| Orientation of data in relation to geological structure |
| Drill holes exploring the extents of the Havieron mineral system intersect moderately dipping carbonate and siliclastic sedimentary facies, mineralised breccia and sub-vertical intrusive lithologies. Geological modelling has been interpreted from historic and Newcrest drill holes. Variable brecciation, alteration and sulphide mineralisation are observed with a footprint with dimensions of 650m x 350m trending in a north west orientation and 1000m in vertical extent below cover. The subvertical southeast high grade arcuate crescent sulphide zone has an average thickness of 20m and has been defined over a strike length of up to 550m, and over 700m in vertical extent below cover. Drilling direction is oriented to intersect the steeply dipping high-grade sulphide mineralisation zones at an intersection angle of greater than 40 degrees. The drilled length of reported intersections is typically greater than true width of mineralisation. |
| Sample security |
| The security of samples is controlled by tracking samples from drill rig to database. Drill core was delivered from the drill rig to the Havieron core yard every shift. On completion of geological and geotechnical logging, core processing was completed by Newcrest personnel at the Havieron facility. High resolution core photography and cutting of drill core was undertaken at the Havieron or Telfer core processing facilities. Samples were freighted in sealed bags by air and road to the Laboratory, and in the custody of Newcrest representatives. Sample numbers are generated directly from the database. All samples are collected in pre-numbered calico bags. Verification of sample numbers and identification is conducted by the laboratory on receipt of samples, and sample receipt advice issued to Newcrest. Details of all sample movement are recorded in a database table. Dates, Hole ID sample ranges, and the analytical suite requested are recorded with the dispatch of samples to analytical services. Any discrepancies logged at the receipt of samples into the analytical services are validated. |
| Audits or reviews |
| Internal reviews of core handling, sample preparation and assays laboratories were conducted on a regular basis by both project personnel and owner representatives. In the Competent Person's opinion, the sample preparation, security and analytical procedures are consistent with current industry standards and are entirely appropriate and acceptable for the styles of mineralisation identified and will be appropriate for use in Mineral Resource estimates. There are no identified drilling, sampling or recovery factors that materially impact the adequacy and reliability of the results of the drilling programme in place at the Havieron Project. |
Section 2: Reporting of Exploration Results
| Criteria |
| Commentary |
| Database integrity |
| Data are stored in a SQL acQuire database. Assay and geological data are electronically loaded into acQuire and the database is replicated in Newcrest's centralised database system in Melbourne. In-built validation tools are used in the acQuire™ database and data loggers are used to minimise keystroke errors, flag potential errors and validate against internal library codes. Regular reviews of data quality are conducted by site and corporate teams prior to resource estimation. Final surveyed collars are checked against the original collar GPS pickup and the Lidar topographic surface. Downhole surveys are checked visually and statistically for outliers. Assay data is checked for negative, extreme, missing and overlapping samples. Below detection assay values are set to half the lower detection limit for estimation. Geological domains are reviewed against core photography, geochemistry and Corescan data and checked for overlaps and missing intervals. Data that is found to be in error is investigated and corrected where possible. If the data cannot be corrected it is removed from the data set used for resource modelling and estimation. |
| Site visits |
| The Competent Person for the Indicated Mineral Resource and Inferred Mineral Resource estimate is an employee of Newcrest and is based in Telfer. The Competent Person has remained closely linked with the project at all stages and has completed numerous site inspections on a regular basis with the last visit completed in 2021. The Competent Person has reviewed the drilling, sampling, sample security, drill logging, and data management and is satisfied with the quality of the measures undertaken. |
| Geological interpretation |
| The geology model is based on grouped primary logging domain codes interpreted from drill cores. 3D solids were modelled in Leapfrog Geo 6.1 using vein, intrusive and erosional implicant models. The geology model for the Havieron deposit comprises a cover sequence and a basement sequence of variably mineralised and altered metasediments. The cover sequence consists of 7 sub horizontal units ascribed to the Permian whilst the basement sequence consists of the Crescent Zone that typically comprises of the massive sulphides including locally banded pyrrhotite or chalcopyrite., Calcite Cemented Breccia, Actinolite Cemented Breccia, Crackle Breccia and the post mineralisation Dolerite dyke. Mineralisation in Havieron is hosted in the Crescent and to a lesser extent within the cemented breccia's (Calcite Cemented and Actinolite Cemented Breccia). These units are therefore used as estimation domains. The confidence in the geological volumes that were used to define the estimation domains is reflected in the Mineral Resource classification. |
| Dimension |
| Variable brecciation, alteration and sulphide mineralisation are observed with a footprint with dimensions of 650m x 350m trending in a north west orientation and 1000m in vertical extent below ~420m of cover. The SE Crescent Zone Mineral Resource extents are ~550m in unfolded plan section, between 5-40m true width and ~750m in vertical extent, mineralisation remains open at depth. The Breccia Mineral Resource extents occurs as a 50-100m sleeve around the SE Crescent Mineral Resource and also a ~250x50x300 NW trending zone in the north western half on the breccia complex "Northern Breccia" which remains open at depth and to the northwest. |
| Estimation and modelling techniques |
| Geostatistical testing of the gold and copper grade distributions showed that the Breccia Zones are moderately diffusive in nature, and the Crescent Zone is relatively weakly diffusive in nature. Even though the Crescent Zone is weakly diffusive in nature, the estimation method of OK is considered appropriate due to the consideration of the geological setting, geological observation from the logging data and the geometry of the domain. All drillhole samples were composited to 5 metre intervals downhole and honouring the domain boundary. OK estimation of gold, copper, sulphur, iron, cobalt, bismuth, arsenic, lead, zinc and nickel, was undertaken into 10 m x 10 m x 10 m blocks for the Crescent Zone and 20 m x 20 m x 20 m blocks for the Breccia with discretisation of 4 x 4 x 4. A single pass run was conducted for gold, copper, sulphur, iron and cobalt estimate and two passes were conducted for bismuth, arsenic, lead, zinc and nickel estimates. The minimum and maximum number of informing composites were 10 and between 20 to 24 respectively, depending on the domain and variable being estimated. Due to the highly skewed nature of the grade distribution, a grade capping strategy has been applied for variables including Au, Cu, Co, Bi, As, Pb, Zn and Ni. Caps are typically around the value at a 99th percentile of distributions. The model grades were estimated in Isatis software. Gold and copper were the only revenue generating elements, no recovery of by-products has been assumed. Variables were estimated independently. The block size was chosen on the basis of estimation quality and likely scale of mining. The block model used for interpolators was populated with local rotations for the Crescent Zone and the Calcite Breccia Zone based on the orientation of the mineralisation including the high grade (structurally control) zone with a hard boundary applied between domains. The entire resource is based on interpolation of grades. The model has been validated via visual, statistical and geostatistical method, including statistical comparison, metal at risk analysis, swath plots, Global Change of Support (Discrete Gaussian Modelling) comparison and visual comparison of the drillholes and the blocks by sections and plan views. The model assumes the likelihood of a selective mining method for the Crescent Zone. |
| Moisture |
| All tonnages are calculated and reported on a dry tonnes basis. |
| Cut-off parameters |
| A value algorithm is used to calculate the NSR for each block using revenue and cost assumptions as of July 2020. The NSR calculation takes account revenue factors, metallurgical recovery assumptions (outlined below), transport costs and refining charges and royalty charges with the gold price of US$1,400 per ounce, copper price of US$3.40 per pound and a 0.75 AUD:USD exchange rate. The Indicated Mineral Resource was defined based on a threshold of A$100/t within the SE Crescent Zone. A smoothed shell was generated based on a threshold of A$50/t and includes internal below value cut-off blocks and excludes isolated above cut-off blocks applied for the definition of the Inferred Mineral Resources. Both Indicated Mineral Resources and Inferred Mineral Resources are representing the limit of reasonable prospects of eventual economic extraction. The A$100/t cut-off for Indicated Mineral Resources and A$50/t cut-off for Inferred Mineral Resources are based on Newcrest's experience at its nearby Telfer operation, its current understanding of the Havieron deposit and other benchmarked operations. |
| Mining factors or assumptions |
| The Indicated Mineral Resource estimate is reported based on the A$100/t NSR value cut-off and the average weighted distance of 45metres within the SE Crescent Zone, based on mining selective mining. The Inferred Mineral Resource estimate is reported within a notional constraining shell based on an A$50/t NSR value cut-off, based on bulk mining and therefore all internal materials are reported within the constraining shell. The current proposal is to potentially commence mining the high-grade Crescent Zone by underground SLOS. |
| Metallurgical factors or assumptions |
| Havieron underground ore will be processed on a campaign basis through the Telfer Train 2 Treatment Plant circuit at a throughput of approximately 2Mtpa. Metal recovery will be through conventional flotation to produce a copper/gold concentrate and doré through a newly installed flotation tails leach circuit. The technology associated with the ore processing is conventional and the flowsheet is similar to that utilised by other operations. Metallurgical recovery assumptions are based on detailed analysis and laboratory flotation and leach test work completed on 38 variability samples during the Havieron Concept (2020) and Pre-Feasibility (2021) studies with good spatial coverage of the SE Crescent Zone. Of the 38 samples, 8 samples are located in the Breccia zones and 30 samples are located in the SE Crescent Zone, of which 21 samples are located within the SE Crescent Zone Indicated Mineral Resources. Based on these samples metallurgical recoveries for gold are anticipated to average approximately 88% and recoveries of copper are expected to average approximately 84% throughout the life of the project. Bismuth is the key deleterious element for the gold/copper concentrate product with smelter penalties incurred on the basis of bismuth content. The impact of bismuth in concentrate will be managed by mine sequencing and concentrate blending. Bulk sample or pilot scale test work has not been undertaken. |
| Environmental factors or assumptions |
| As Havieron is a brownfields project the potential environmental impact assessments are not well advanced; however, the assumption is that there will be no significant impediments to conventional waste management of rock and tailings as utilised at Newcrest's Telfer Operations based on the similarities between the Havieron and Telfer deposits. |
| Bulk Density |
| All bulk density measurements have been carried out in accordance with site standard procedure and used a standard water immersion method. Intervals for bulk density determination are selected according to lithology/ alteration/mineralisation type to best represent certain intervals as defined by the geologist. The measurements are performed on site by geologists or geological assistants as part of the logging process. Measurements are based on 10 cm to 20 cm lengths generally taken at 10 metre to 50 metre intervals down hole. Bulk density from several thousand measurements was estimated into the block model by an inverse distance method on a domain-wise basis. |
| Classification |
| The Mineral Resource estimate has been classified as an Indicated Mineral Resource and an Inferred Mineral Resource. The resource classification is based on drillhole spacing and geological and grade continuity including the assessment of average weighted distance of informing samples. The Indicated Mineral Resource estimate is classified within the SE Crescent Zone only with a nominal drill spacing less than 45m x 45m, the Inferred Mineral Resource estimate is classified within a nominal drill spacing less than 100m x 100m and the contiguous footprint of the reasonable prospect of eventual economic extraction. The Indicated Mineral Resource and Inferred Mineral Resource classifications appropriately reflects the view of the Competent Person. |
| Audits or reviews |
| Derisk Geomining Consultants conducted an independent review of the previous Havieron Underground Mineral Resource estimate (November 2020) and concluded that the estimate has been prepared using accepted industry practice, has been completed in accordance with the JORC Code guidelines, is suitable for preparing a public report documenting the Mineral Resource estimate. Some responses and actions were noted from this review and have been included in this updated estimate. |
| Discussion of relative accuracy/ confidence |
| The uncertainty of the geological domain at the upper part of SE Crescent is considered between moderate to low. The grade uncertainty of the Indicated classification of the SE Crescent Zone is supported by the ±15% variability at 90% confidence interval of the mining rate 2-3Mtpa derived from the conditional simulation. The breccia is considered Inferred Mineral Resources and reflects the wide spaced drilling where the geological evidence is sufficient to imply but not verify geological and grade continuity, thus it is deemed not necessary to assess the relative uncertainty in tonnage, grade and metal over a production volume for Inferred Mineral Resources. There is no production data for Havieron. |
Section 4: Estimation and Reporting of Ore Reserves
| Criteria |
| Commentary |
| Mining factors or assumptions |
| Estimation of the Havieron Ore Reserve involved standard steps of mine optimisation, mine design, production scheduling and financial modelling. The basis of the analysis is considered at Pre-Feasibility Study level. The Pre-Feasibility Study supports the appropriateness of the selected mining method (Sub-Level Open Stoping) at a 2Mtpa mining rate as the basis of the Ore Reserve estimate.
Ore Reserves estimates and statements are required to include estimates of dilution. The dilution included in the total Ore Reserve is approximately 2.7Mt which is comprised of Inferred Mineral Resources and unclassified material and paste fill dilution. Only metal from the Inferred Mineral Resource material is considered in the dilution estimate. This is a relatively small proportion (2% of the gold metal and 1.6% of the copper metal) of the tabled Ore Reserve and does not have a material impact upon the estimate. Even without consideration of the metal contained in the dilution incorporated in the Ore Reserve, the economic analysis indicates an economic Probable Ore Reserve. The Havieron Project is a greenfield mining project and will require the following mining infrastructure to support the mine:
|
| Metallurgical factors or assumptions |
| Havieron underground ore will be processed on a campaign basis through the Telfer Train 2 Treatment Plant circuit at a throughput of approximately 2Mtpa. Metal recovery will be through conventional flotation to produce a copper/gold concentrate and doré through a newly installed flotation tails leach circuit. The technology associated with the ore processing is conventional and the flowsheet is similar to that utilised by other operations. Metallurgical recovery assumptions are based on detailed analysis and laboratory flotation and leach test work completed on 38 variability samples during the Havieron Concept (2020) and Pre-Feasibility (2021) studies with good spatial coverage of the SE Crescent Zone. Of the 38 samples, 8 samples are located in the breccia zones and 30 samples are located in the SE Crescent Zone, of which 21 samples are located within the SE Crescent Zone Indicated Mineral Resources. Based on these samples, metallurgical recoveries for gold are anticipated to average approximately 88% and recoveries of copper are expected to average approximately 84% throughout the life of the project. Bismuth is the key deleterious element for the gold/copper concentrate product with smelter penalties incurred on the basis of bismuth content. The impact of bismuth in concentrate will be managed by mine sequencing and concentrate blending. Bulk sample or pilot scale test work has not been undertaken. |
| Environmental |
| Detailed environmental studies have been undertaken in the project area and include flora and vegetation, fauna, subterranean fauna, waste rock characterisation, soil and landform study, surface hydrology assessment, a basic hydrogeological assessment and a greenhouse gas emissions study. The Project has been designed to recognise biodiversity values and, through consultation with Martu and their native title corporation (WDLAC), minimise the impacts to sites and landscapes of cultural significance. The footprint for the Project has been minimised through the use of existing tracks and areas of disturbance, as well as utilising the existing Telfer Gold Mine infrastructure to process the ore and dispose of the tailings material. Waste rock characterisation has been undertaken and shows that it contains material which has potentially acid forming (PAF) and metalliferous drainage, in addition to dispersive or saline material. The portion of PAF material is less than 1% of total waste volumes. Waste dumps have been designed for the life of mine that have incorporated cells to safely encapsulate the PAF material. The waste dump is to be located near the boxcut to minimise haulage distance and considering the local surface terrain and environmental and cultural aspects. A staged approach for approvals is being undertaken, with Stage 1 currently approved, which has allowed the development of the boxcut, decline and service corridor. These approvals also allow for a waste rock dump, evaporation ponds and supporting infrastructure such as offices and workshops. Stage 2 approvals will consist of a SLOS underground mine, permanent infrastructure corridor, associated infrastructure and changes to Telfer approvals to accept Havieron tailings in existing tailings storage facilities. |
| Infrastructure |
The Havieron Sub-Level Open Stoping mine is a greenfield project and will require the following infrastructure to support mining operations:
|
| Costs |
| Capital and operating costs have been determined as part of the Pre-Feasibility Study. Capital cost estimates are based on multiple market prices across all technical disciplines and include processing upgrade and mine development costs along with associated surface and underground infrastructure, project establishment and sustaining capital costs. These provisions have been allowed for during the life of the mine based on most recent Pre-Feasibility plan estimates. Contingency has also been factored into the project capital cost estimate consistent with the level of accuracy of the study. The operating cost estimate includes the mining cost, surface transport cost, processing cost and relevant site general and administration costs. Ore Reserve cost estimates have been reviewed as part of the study execution and are considered to be to a Pre-Feasibility Study level. Long term metal prices and exchange rate assumptions adopted in the Pre-Feasibility Study 2021 are US$1,300/oz for gold, US$3.00/lb for copper, at a USD:AUD exchange rate of 0.75. These assumptions are consistent with Newcrest metal price guidelines for 2021 Ore Reserve reporting. Transport and refining charges have been developed from first principles consistent with the application of the current Telfer operation. These included charges for deleterious elements, e.g. bismuth where applicable. Costs include a revenue based payment from mining the Havieron Project area under the ILUA with WDLAC. State royalties are 2.5% for gold, 5% for copper after allowable deductions. |
| Revenue factors |
| Long term metal prices and exchange rate assumptions adopted in the Pre-Feasibility Study Ore Reserve estimation process are US$1,300/oz for gold, US$3.00/lb for copper, at a USD:AUD exchange rate of 0.75. These assumptions are consistent with Newcrest metal price guidelines for the 2021 Ore Reserve reporting. The NSR calculation takes into account Ore Reserve revenue factors, metallurgical recovery assumptions, transport costs and refining charges and royalty charges. |
| Market assessment |
| Newcrest is a price taker and gold is sold on the open market and subject to price fluctuations. Supply and demand for gold from Telfer and Havieron is not a constraint in the estimation of the Ore Reserve. Telfer has sold copper concentrate for its operational life into the world concentrate markets and this is assumed to continue under conditions similar to Newcrest's current market agreements over the life of the operational plan. Concentrate volume forecasts were derived from the Pre-Feasibility Study production schedule. |
| Economic |
| The Ore Reserve has been evaluated through a financial model. All operating and capital costs as well as revenue factors stated in this document were included in the financial model. A discount factor of 4.5% real was applied. This process demonstrated the Havieron Ore Reserve to have a positive NPV. Sensitivities were conducted on the key input parameters including commodity prices, capital and operating costs, ore grade, mined tonnes, mining rate, exchange rate and metallurgical recoveries confirming the estimate to be robust. The NPV range has not been provided as it is commercially sensitive. |
| Social |
| The landowners, the Martu people and the WDLAC are key project stakeholders. The Martu hold exclusive possession native title rights and interests over more than 130,000km2 of land, including to all points around the Telfer mine and Havieron Project. The ILUA with WDLAC, centred on the Telfer mine, extends to the Havieron Project. |
| Other |
| The only identified material naturally occurring risk at Havieron is flooding from large rain events typically associated with the cyclone season. The existing boxcut has been located and all other surface connections to the surface have been designed above a modelled 1 in 1,000 year Average Recurrence Interval (ARI) event where possible, or will be elevated such that large volumes of water cannot enter the mine workings. A number of State and Commonwealth statutory requirements are relevant to the Havieron Project and all aspects of the Project will comply with the relevant Government Acts and Regulations applicable in the jurisdiction of Western Australia. A staged approach for approvals is being undertaken with Stage 1 currently approved which has allowed the development of the boxcut, decline and service corridor. These approvals also allow for a waste rock dump, evaporation ponds and supporting infrastructure such as offices and workshops. Minor additional approvals are in the process of being obtained and include a Groundwater Licence amendment and Part V approval to allow the operation of the evaporation ponds, waste water treatment plant and to allow construction of a landfill for non-mineralised waste. The Part V licence and registrations have approved Works Approvals and detailed consultation regarding the Groundwater Licence and associated Water Management Plan has occurred. Stage 2 approvals will consist of a SLOS underground mine, permanent infrastructure corridor, associated infrastructure and changes to Telfer approvals (processing of Havieron ore, Tailings Storage Facility 8 [TSF8] raise to accept Havieron tailings), groundwater use at Havieron. The approval strategy for Stage 2 consists of both Commonwealth and State level approvals with engagement well advanced with all regulatory bodies. The timelines outlined in the Pre-Feasibility Study are considered achievable. A Mining Lease has been granted over the orebody, and miscellaneous leases granted along the existing service corridor. For Stage 2 approvals, an additional miscellaneous lease will be applied for to secure access for an infrastructure corridor to connect Telfer and Havieron (haul road, powerlines, water pipes). This is not considered a risk to the timelines or project. |
| Classification |
| The Ore Reserve classification is based on Indicated Mineral Resources only. No Measured Mineral Resources are stated for this deposit. This classification is based on geological confidence as a function of continuity and complexity of geological features; data spacing and distribution and estimation quality parameters including distance to informing samples for block grade estimation. Inferred Mineral Resource material has been included within the Probable Ore Reserve as mined dilution due to the nature of stoping mining. This is a relatively small proportion (0.03 Moz gold or 2% & 1.2 kt copper or 1.6%) of the tabled Ore Reserve. Even without consideration of Inferred Mineral Resource material in the mining inventory, the proportion of Indicated Mineral Resource material would still conclusively deliver a Probable Ore Reserve. It is the Competent Person's view that the classifications used for the Ore Reserves are appropriate. |
| Audits or reviews |
| Golder Associates Pty Ltd (Golder) was commissioned to conduct an independent review of the Ore Reserve estimation processes and results. Golder concluded that the Ore Reserve had been prepared using accepted industry practice and is considered suitable and reported in accordance with the JORC Code, 2012 Edition. |
| Discussion of relative accuracy/ confidence |
| The accuracy of the estimates within this Ore Reserve is mostly determined by the order of accuracy associated with the Mineral Resource estimate, the geotechnical input and the cost factors used. The Competent Person views the Havieron Ore Reserve a reasonable assessment of the global estimate. Some risk and opportunity is associated with the Ore Reserve process due to the greenfield nature of the project. Remaining areas of uncertainty at this stage are associated with:
|
Forward Looking Statements
This document includes forward looking statements and forward looking information within the meaning of securities laws of applicable jurisdictions. Forward looking statements can generally be identified by the use of words such as "may", "will", "expect", "intend", "plan", "estimate", "anticipate", "believe", "continue", "objectives", "targets", "outlook" and "guidance", or other similar words and may include, without limitation, statements regarding estimated reserves and resources, certain plans, strategies, aspirations and objectives of management, anticipated production, study or construction dates, expected costs, cash flow or production outputs and anticipated productive lives of projects and mines. Newcrest continues to distinguish between outlook and guidance. Guidance statements relate to the current financial year. Outlook statements relate to years subsequent to the current financial year.
These forward looking statements involve known and unknown risks, uncertainties and other factors that may cause Newcrest's actual results, performance and achievements or industry results to differ materially from any future results, performance or achievements, or industry results, expressed or implied by these forward-looking statements. Relevant factors may include, but are not limited to, changes in commodity prices, foreign exchange fluctuations and general economic conditions, increased costs and demand for production inputs, the speculative nature of exploration and project development, including the risks of obtaining necessary licences and permits and diminishing quantities or grades of reserves, political and social risks, changes to the regulatory framework within which Newcrest operates or may in the future operate, environmental conditions including extreme weather conditions, recruitment and retention of personnel, industrial relations issues and litigation. For further information as to the risks which may impact on Newcrest's results and performance, please see the risk factors included in the Operating and Financial Review included in the Appendix 4E and Financial Report for the year ended 30 June 2021 which is available to view at www.asx.com.au under the code "NCM" and on Newcrest's SEDAR profile.
Forward looking statements are based on Newcrest's good faith assumptions as to the financial, market, regulatory and other relevant environments that will exist and affect Newcrest's business and operations in the future. Newcrest does not give any assurance that the assumptions will prove to be correct. There may be other factors that could cause actual results or events not to be as anticipated, and many events are beyond the reasonable control of Newcrest. Readers are cautioned not to place undue reliance on forward looking statements, particularly in the current economic climate with the significant volatility, uncertainty and disruption caused by the COVID-19 pandemic. Forward looking statements in this document speak only at the date of issue. Except as required by applicable laws or regulations, Newcrest does not undertake any obligation to publicly update or revise any of the forward looking statements or to advise of any change in assumptions on which any such statement is based.
Non-IFRS Information
Newcrest's results are reported under International Financial Reporting Standards (IFRS). This document includes certain
non-IFRS financial information within the meaning of ASIC Regulatory Guide 230: 'Disclosing non-IFRS financial information' published by ASIC and within the meaning of Canadian Securities Administrators Staff Notice 52-306 - Non-GAAP Financial Measures. Such information includes: 'Free Cash Flow' (calculated as cash flow from operating activities less cash flow related to investing activities and 'AISC' (All-In Sustaining Cost) as per the updated World Gold Council Guidance Note on Non-GAAP Metrics released November 2018. AISC will vary from period to period as a result of various factors including production performance, timing of sales and the level of sustaining capital and the relative contribution of each asset. These measures are used internally by Newcrest management to assess the performance of the business and make decisions on the allocation of resources and are included in this document to provide greater understanding of the underlying performance of Newcrest's operations. The non-IFRS information has not been subject to audit or review by Newcrest's external auditor and should be used in addition to IFRS information. Such non-IFRS financial information/non-GAAP financial measures do not have a standardised meaning prescribed by IFRS and may be calculated differently by other companies. Although Newcrest believes these non-IFRS/non-GAAP financial measures provide useful information to investors in measuring the financial performance and condition of its business, investors are cautioned not to place undue reliance on any non-IFRS financial information/non-GAAP financial measures included in this document. When reviewing business performance, this non-IFRS information should be used in addition to, and not as a replacement of, measures prepared in accordance with IFRS, available on Newcrest's website, the ASX platform and SEDAR.
Ore Reserves and Mineral Resources Reporting Requirements
As an Australian Company with securities listed on the Australian Securities Exchange (ASX), Newcrest is subject to Australian disclosure requirements and standards, including the requirements of the Corporations Act 2001 and the ASX. Investors should note that it is a requirement of the ASX listing rules that the reporting of ore reserves and mineral resources in Australia is in accordance with the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code) and that Newcrest's ore reserve and mineral resource estimates comply with the JORC Code.
Newcrest is also subject to certain Canadian disclosure requirements and standards, as a result of its secondary listing on the Toronto Stock Exchange (TSX), including the requirements of National Instrument 43-101 (NI 43-101). Investors should note that it is a requirement of Canadian securities law that the reporting of Mineral Reserves and Mineral Resources in Canada and the disclosure of scientific and technical information concerning a mineral project on a property material to Newcrest comply with
NI 43-101.
Newcrest's material properties are currently Cadia, Lihir, Red Chris and Wafi-Golpu. Copies of the NI 43-101 Reports for Cadia, Lihir and Wafi-Golpu, which were released on 14 October 2020, are available at www.newcrest.com and on Newcrest's SEDAR profile. The Red Chris NI 43-101 report is expected to be submitted within 45 days of the date of this market release.
Competent Person's Statement
The information in this document that relates to Havieron Ore Reserves is based on and fairly represents information compiled by Pasqualino Manca. Pasqualino Manca is the Group Manager Mining Studies and a full-time employee of Newcrest Mining Limited. He is a shareholder in Newcrest Mining Limited and is entitled to participate in Newcrest's executive equity long term incentive plan, details of which are included in Newcrest's 2021 Remuneration Report. He is a Fellow of the Australasian Institute of Mining and Metallurgy. Pasqualino Manca has sufficient experience which is relevant to the styles of mineralisation and types of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the JORC Code and as a Qualified Person under NI 43-101. Pasqualino Manca approves the disclosure of scientific and technical information contained in this document and consents to the inclusion of material of the matters based on his information in the form and context in which it appears.
The information in this document that relates to Havieron Mineral Resources is based on and fairly represents information compiled by Ashok Doorgapershad. Ashok Doorgapershad is the Chief Geologist and a full-time employee of Newcrest Mining Limited. He is a shareholder in Newcrest Mining Limited and is entitled to participate in Newcrest's executive equity long term incentive plan, details of which are included in Newcrest's 2021 Remuneration Report. He is a Fellow of the Australian Institute of Mining and Metallurgy. Ashok Doorgapershad has sufficient experience which is relevant to the styles of mineralisation and types of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the JORC Code and as a Qualified Person under NI 43-101. Ashok Doorgapershad approves the disclosure of scientific and technical information contained in this document and consents to the inclusion of material of the matters based on his information in the form and context in which it appears.
The information in this document that relates to Exploration Results at Havieron has been extracted from Newcrest's releases titled "Exploration Update" dated 9 September 2021 and "Quarterly Exploration Report" dated 22 July 2021, 28 January 2021 and 29 October 2020 (the original releases). The original exploration releases are available to view at www.asx.com.au under the code "NCM" and on Newcrest's SEDAR profile. Newcrest confirms that it is not aware of any new information or data that materially affects the information included in the original releases and that all material assumptions and technical parameters underpinning the estimates in the original releases continue to apply and have not materially changed. Newcrest confirms that the form and context in which the competent person's findings are presented have not been materially modified from the original releases.
Authorised by a Newcrest Board Committee
For further information please contact
Investor Enquiries
Tom Dixon
+61 3 9522 5570
+61 450 541 389
Tom.Dixon@newcrest.com.au
Ben Lovick
+61 3 9522 5334
+61 407 269 478
Ben.Lovick@newcrest.com.au
North American Investor Enquiries
Ryan Skaleskog
+1 866 396 0242
+61 403 435 222
Ryan.Skaleskog@newcrest.com.au
Media Enquiries
Tom Dixon
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+61 450 541 389
Tom.Dixon@newcrest.com.au
This information is available on our website at www.newcrest.com.
1 The Pre-Feasibility Study is subject to an accuracy range of ±25%. The findings in the Study and the implementation of the Havieron Project are subject to all the necessary approvals, permits, internal and regulatory requirements and further works. The estimates are indicative only and are subject to market and operating conditions. They should not be construed as guidance.
2 The production targets underpinning the Study estimates are LOM average annual gold and copper production of 160koz Au and 6.9kt Cu. The production targets are based on the utilisation of 100% of the total Havieron Ore Reserves, being 1.6Moz Au and 73Kt Cu Probable Ore Reserves, as set out on Page 12, which have been prepared by a Competent Person in accordance with Appendix 5A of the ASX Listing Rules.
3 As Havieron's functional currency is AUD, the Study has been assessed in AUD. AUD values have been converted to USD using an exchange rate of 0.75.
4 Payback is the earliest date that net accumulated free cash flow is equal to zero. This is calculated from first commercial production which is defined as the expected commencement date of saleable gold production.
5 Subject to market and operating conditions, all necessary approvals, regulatory requirements and no unforeseen delays (including any delays due to COVID-19).
6 Represents 100% of the Ore Reserve for Havieron. Newcrest's joint venture interest in the Ore Reserve is currently 40%. Newcrest has now met the Stage 3 farm-in requirement and has earnt an additional 20% joint venture interest, resulting in a joint venture interest of 60%. Upon delivery of the PFS, Newcrest is entitled to earn an additional 10% joint venture interest, resulting in an overall joint venture interest of 70% (Greatland Gold 30%).
7 Inclusive of previously approved Early Works funding totalling A$146 million (US$112 million). See Newcrest release titled "Havieron Project receives regulatory and funding approval" dated 13 January 2021 which is available to view at www.asx.com.au under the code of "NCM" and on Newcrest's SEDAR profile.
8 Upon finalisation of the Study, Greatland Gold is obliged to fund 30% of all project expenditure going forward and Newcrest is obliged to fund 70%. This funding split will adjust to 25% Greatland Gold and 75% Newcrest if Newcrest exercises its option to acquire the additional 5% interest in the 12 months from 12 December 2021.
9 Using a discount factor of 4.5% (real).
10 Newcrest has now met the Stage 3 farm-in requirement and has earnt an additional 20% joint venture interest, resulting in a joint venture interest of 60%. Upon delivery of the PFS, Newcrest is entitled to earn an additional 10% joint venture interest resulting in an overall joint venture interest of 70% (Greatland Gold 30%).
11 Total operating costs includes mining costs, processing costs, infrastructure costs and general and administrative costs.
12 Data is reported to two significant figures to reflect appropriate precision in the estimate and this may cause some apparent discrepancies in totals. Data represents 100% of the Mineral Resource for Havieron. Newcrest 's joint venture interest in the Mineral Resource is 40%. Newcrest has now met the Stage 3 farm-in requirement and has earnt an additional 20% joint venture interest, resulting in a joint venture interest of 60%. Upon delivery of the PFS, Newcrest is entitled to earn an additional 10% joint venture interest, resulting in an overall joint venture interest of 70% (Greatland Gold 30%).
13 Data is reported to two significant figures to reflect appropriate precision in the estimate and this may cause some apparent discrepancies in totals. Data represents 100% of the Ore Reserve for Havieron. Newcrest's joint venture interest in the Ore Reserve is 40%. Newcrest has now met the Stage 3 farm-in requirement and has earnt an additional 20% joint venture interest, resulting in a joint venture interest of 60%. Upon delivery of the PFS, Newcrest is entitled to earn an additional 10% joint venture interest, resulting in an overall joint venture interest of 70% (Greatland Gold 30%).
14 The Havieron drill results included in this document have been extracted from Newcrest's releases titled "Exploration Update" dated 9 September 2021 and "Quarterly Exploration Report" dated 22 July 2021, 28 January 2021 and 29 October 2020. These releases include the exploration results for all material drill holes (including those referred to in this document).
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/99291