* Golpu project to cost $4.8 billion
* Harmony sees Golpu production in 2019
* Doesn't see need for additional funding until 2017
(Recasts with additional detail, quotes)
By Sherilee Lakmidas
JOHANNESBURG, Aug 29 Harmony Gold Mining
, South Africa's third-largest gold producer, said Papua
New Guinea would have to pay if it wanted a stake in the
company's promising Golpu project in the Asian country.
Harmony is staking its future on the $4.8 billion project it
is developing with Australian group Newcrest Mining.
Papua New Guinea has the right to a 30 percent stake in
mining operations. Harmony chief executive Graham Briggs said on
Wednesday if the government exercised this option it would
include development costs already forked out.
"This is not a free carry, it will be full participation if
the government gets involved. Assuming they would take 30
percent, they would have to pay 30 percent of the historical
costs," Briggs told analysts on a conference call.
The gold and copper project's prefeasibility study estimates
an initial mine life of 26 years with annual production of
490,000 ounces of gold and 290,000 tonnes of copper.
The aim is to start production in 2019.
Briggs said it was difficult to say whether the government
was in a position to pay for the stake but he said discussions
with ministers suggest they see the project as generating
significant growth for the region.
"This is certainly a game changer in Papua New Guinea, it
could add considerable amounts to the GDP and there are lots of
opportunities for the government to leverage off this," he said.
NO FUNDING SEEN REQUIRED BEFORE 2017
Results of the prefeasibility study peg the cost of
establishing a copper-gold development at around $4.8 billion,
which will be shared evenly by Harmony and Newcrest.
Chief Financial Officer Frank Abbott said the firm would
consider debt or bonds to top up its capital expenditure needs
as the production of its Papua New Guinea operations gets
"We don't see the need for additional funding until 2017 and
then it will depend on the gold price," Abbott said.
He indicated that if the gold price remained in the $1,600
an ounce range, the company would need to raise 4 billion rand
($475 million) but if it dipped to $1,400 an ounce it would
require almost double or 7 billion rand ($832 million). Spot
gold is currently fetching about $1,665.00.
The project is a game changer for Harmony as it diversifies
production away from high-cost and politically-risky South
Africa, where labour violence in the platinum belt has killed 44
people this month.
The company currently gets 90 percent of its output from
South Africa and aims to lift production to 1.7 million ounces
by 2016 from a target 1.3 million ounces in 2013.
($1 = 8.4155 rand)
(Reporting by Sherilee Lakmidas; editing by Ed Stoddard and