Progress for Marengo’s PNG copper-moly project

Marengo Mining (MRN-T, MGO-A) is considering the financial merit behind a 50-million-tonne-per-year copper-molybdenum open-pit mine in Papua New Guinea.

The Perth, Australia-based company, which listed on the Toronto Stock Exchange in April, released the details of the first phase of its feasibility study for the Yandera copper- moly project.

Marengo plans to complete the rest of the study, including capital cost estimates, by mid-2009; the first part looked at development options.

The study looks at mining 450 million tonnes of ore at a grade of 0.48% copper equivalent over 10 years. Stretching 7 by 2 km, the mineralized system extends well beyond the area included in the inferred resource.

The project has an indicated resource of 163 million tonnes grading 0.49% copper equivalent, using a copper-equivalent cutoff of 0.3% copper) and an inferred resource of 497 million tonnes grading 0.48% copper equivalent (using the same cutoff).

Ore would be processed at 25 million tonnes during the first two years, then ramped up to a long-term rate of 50 million tonnes per year.

Ore would be crushed near or in the mine before being transported by conveyor 2.5-4 km to the processing plant.

The company would use two 40- ft. semi-autogenous grinding mills with ball mills in tandem for the grind circuit, with separate copper and moly flotation circuits to extract the two concentrate streams.

The copper concentrate would be pumped to the port site 75 km southwest of the project site in a slurry pipeline that would be laid alongside the main access road and the major highway into the port town Madang.

There, it would be treated in a thickener and drying facility before being stored in a covered storage shed, which could store up to 60,000 tonnes. Batches of 30,000- 35,000 tonnes would be shipped in cargo vessels.

Molybdenum, accounting for less than 5% of the metal production (and 30% of revenues) from the project concentrate, would be placed in shipping containers and back-loaded to the port facility. The second phase of the study will look at whether more downstream molybdenum processing could be done before shipping.

For the tailings, Marengo looked at a tailings storage facility within the Ramu Valley, about 28 km from the plant site.

But the company is also considering deep sea tailings about 100 km from the plant site or a combination of both. Further studies are needed to determine if the tailings storage facility in the valley would be able to sustain the 10-year mine life.

It was estimated that the project would require up to 240 megawatts of power at maximum capacity. The national power provider as well as private power suppliers have been approached about developing either single or multiple solutions for the project.

Marengo acquired the 1,200-sq.- km Yandera project in April 2005. The project was previously explored in the 1970s by BHP and Kennecott Copper.

During that time, 102 diamond- drill holes totalling 33,000 metres were completed. Marengo has since drilled 7,000 metres, digitized all of the historical drill data, and taken 11,000 stream-sediment samples and 5,200 rock samples.

Marengo shares were unchanged in Toronto on the news at 27 each on 3,000 shares traded.

In Australia, the stock gained 2%, closing at A27 on a trading volume of 348,000 shares.