TECHNICAL REPORT ON THE OK TEDI MINING LIMITED MT. FUBILAN COPPER-GOLD MINE MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES, PAPUA NEW GUINEA PREPARED FOR INMET MINING CORPORATION NI 43-101 REPORT Authors: James W. Hendry, P.Eng. Luke Evans, M.Sc., P.Eng. Gerd Wiatzka, P.Eng. ROSCOE POSTLE ASSOCIATES INC. Toronto, Ontario. Vancouver, B.C. RPA August 2, 2005
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TECHNICAL REPORT ON THEOK TEDI MINING LIMITEDMT. FUBILAN COPPER-GOLD MINEMINERAL RESOURCE AND MINERALRESERVE ESTIMATES,PAPUA NEW GUINEAPREPARED FORINMET MINING CORPORATION
NI 43-101 REPORT
Authors:James W. Hendry, P.Eng.Luke Evans, M.Sc., P.Eng.Gerd Wiatzka, P.Eng.
Environmental and Permitting Status ........................................................................ 6-8 Regulatory Regime .............................................................................................. 6-8 Community Mine Continuation Agreements....................................................... 6-9 Social Commitments and Implementation......................................................... 6-10 Closure Requirements........................................................................................ 6-11
7 ACCESSIBILITY, LOCAL RESOURCES, PHYSIOGRAPHY AND INFRASTRUCTURE ...................................................................................................... 7-1
8 HISTORY ..................................................................................................................... 8-1 Exploration History.................................................................................................... 8-2 Historical Mineral Resource and Mineral Reserve Estimates ................................... 8-3
18 MINERAL PROCESSING AND RECOVERY....................................................... 18-1 Mill Operations ........................................................................................................ 18-1
Ore Types........................................................................................................... 18-5 Current Mill Operating Performance ....................................................................... 18-7
19 MINERAL RESOURCES AND MINERAL RESERVES ...................................... 19-1 Mineral Resources ................................................................................................... 19-1
OTML Drill Hole Database ............................................................................... 19-1 Composites......................................................................................................... 19-3 Wireframe Models ............................................................................................. 19-4 Cutting High Assays .......................................................................................... 19-5 Cut-off Grade ..................................................................................................... 19-5 Density Data....................................................................................................... 19-6 Variography ....................................................................................................... 19-7 Search Strategy and Grade Interpolation Parameters ........................................ 19-8 Block Models ..................................................................................................... 19-8 Block Model Validation..................................................................................... 19-8 Mineral Resource Classification ........................................................................ 19-9 Mineral Resource Estimate .............................................................................. 19-12
20 OTHER RELEVANT DATA AND INFORMATION ............................................ 20-1 Current Mine Operations ......................................................................................... 20-1 Current Mine Operating Performance ..................................................................... 20-2
Current Mine Equipment Fleet .......................................................................... 20-3 Kiunga Operations ............................................................................................. 20-4 Power Supply ..................................................................................................... 20-4
Environmental Impacts of Mining ........................................................................... 20-5 Vegetation dieback............................................................................................. 20-5 Acid Rock Drainage (ARD) Issues................................................................... 20-6 Other impacts ..................................................................................................... 20-7 Mine Waste Management .................................................................................. 20-8 Social Commitments and Implementation....................................................... 20-10 Closure Requirements...................................................................................... 20-11
Project Economics ................................................................................................. 20-18 Capital Costs .................................................................................................... 20-18 Operating Costs................................................................................................ 20-19 Processing ........................................................................................................ 20-19 Operations Support .......................................................................................... 20-20 Commercial Group Costs................................................................................. 20-20 Community and Business Support................................................................... 20-21
21 INTERPRETATION AND CONCLUSIONS.......................................................... 21-1 Mineral Resource Estimate ...................................................................................... 21-1 Mineral Reserve Estimate ........................................................................................ 21-2
22 RECOMMENDATIONS.......................................................................................... 22-1 Mineral Resource ..................................................................................................... 22-1
25 CERTIFICATES OF QUALIFICATIONS .............................................................. 25-1 James W. Hendry ..................................................................................................... 25-1 Luke Evans............................................................................................................... 25-3 Gerd Wiatzka ........................................................................................................... 25-5
26 APPENDIX A........................................................................................................... 26-1 List of Acts, Amendments and Change Notices ...................................................... 26-1
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LIST OF TABLES PAGE
Table 1-1 December 2004 Mineral Resource Estimate With RPA Whittle Pit Depth Constraint......................................................................................................................... 1-8 Table 1-2 Mineral Reserve Estimates (Dec 31, 2004)................................................... 1-9 Table 1-3 Support cost estimates ................................................................................. 1-14 Table 1-4 Ok Tedi Cash Flow Projection ..................................................................... 1-16 Table 3-1 List of Abbreviations..................................................................................... 3-1 Table 6-1 List of Active Surface Leases........................................................................ 6-5 Table 6-2 List of Expired Surface Leases With Applications for Surrender................. 6-7 Table 6-3 OTML Exploration Licenses......................................................................... 6-8 Table 8-1 Mount Fubilan Mine Production History ...................................................... 8-2 Table 8-2 Recent Historical Mineral Resource Estimates ............................................. 8-4 Table 8-3 Recent Historical Mineral Reserve Estimates ............................................... 8-5 Table 11-1 Main Rock Types in Reserve Estimate ..................................................... 11-6 Table 13-1 Diamond Hole Core Recovery (from OTML (2004) ................................ 13-3 Table 19-1 OTML Drill Hole Database Records......................................................... 19-1 Table 19-2 OTML 2002 and 2004 Tonnage Factors ................................................... 19-7 Table 19-3 December 2004 Mineral Resource Estimate With RPA Whittle Pit Depth Constraint..................................................................................................................... 19-12 Table 19-4 Drilling & Blasting Costs ........................................................................ 19-14 Table 19-5 Mill Operating Parameters ...................................................................... 19-17 Table 19-6 Key Product Characteristics .................................................................... 19-19 Table 19-7 Processing Costs...................................................................................... 19-20 Table 19-8 Cut Off Grade Factors ............................................................................. 19-24 Table 19-9 Mineral Reserve Estimates (Dec 31, 2004)............................................. 19-26 Table 20-1 Primary Mine Equipment List ................................................................... 20-4 Table 20-2 Life of Mine Capital Cost by Area .......................................................... 20-19 Table 20-3 Ok Tedi Cash Flow Projection ................................................................ 20-23
LIST OF FIGURES PAGE
Figure 1-1 Ok Tedi NPV Sensitivity Analysis ............................................................ 1-17 Figure 1-2 Ok Tedi Sensitivity Analysis .................................................................... 1-18 Figure 6-1 General Location Map.................................................................................. 6-2 Figure 6-2 OTML Property Map ................................................................................... 6-6 Figure 7-1 Air Photo of Tabubil (Photo from www.oktedi.com) .................................. 7-2 Figure 7-2 Mount Fubilan Site and Tabubil in Background.......................................... 7-3
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Figure 9-1 Ok Tedi Property Geology........................................................................... 9-3 Figure 11-1 3-D Perspective of the Wireframes on December 2004 Pit Topography.11-7 Figure 15-1 OTML Laboratory Drill Core Sample Preparation and Analysis ............ 15-2 Figure 18-1 Ok Tedi Copper Concentrator Flowsheet ................................................ 18-2 Figure 19-1 Surface Drill Plan..................................................................................... 19-2 Figure 19-2 Resource Classification on the 1460 m bench (From OTML, 2004)...... 19-11 Figure 19-3 Resource Classification on Section 422,312N (From OTML, 2004). .... 19-11 Figure 19-4 Copper Mined vs. Copper Price Assumption......................................... 19-22 Figure 20-1 Ok Tedi NPV Sensitivity Analysis ........................................................ 20-24 Figure 20-2 Ok Tedi Sensitivity Analysis ................................................................ 20-25
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1 EXECUTIVE SUMMARY INTRODUCTION
Roscoe Postle Associates Inc. (RPA) was retained by Inmet Mining Corporation
(Inmet) and Ok Tedi Mining Limited (OTML) to independently review and audit the
Mineral Resource and Mineral Reserve estimates of the Mount Fubilan Mine in Papua
New Guinea and to prepare a National Instrument 43-101 (NI 43-101) report. This
technical report was written by RPA in accordance with the requirements of NI 43-101,
Companion Policy 43-101CP, and Form 43-101F1 of the Canadian Securities
Administrators (CSA).
OTML operates the Mount Fubilan Mine in the Western Province of Papua New
Guinea (PNG). Inmet owns an 18% interest in OTML, with 52% of OTML held by the
PNG Sustainable Development Program Limited. The remaining 30% interest in OTML
is owned by the PNG government.
The Ok Tedi porphyry copper prospect was discovered by Kennecott Copper
Corporation (Kennecott) in June 1968. Gold production commenced at the Mount
Fubilan Mine in 1984, after completion of feasibility studies in 1978 for an open pit
operation under an international consortium of companies led by the Broken Hill
Proprietary Company Limited (BHP). The first copper processing facilities were
commissioned in 1987.
This technical report is based on the OTML December 2004 Mineral Resource and
Mineral Reserve estimates for the Mount Fubilan Mine. The principal technical
documents and files related to RPA’s audit of the December 2004 Mineral Resource and
Mineral Reserve estimates are listed in the Sources of Information.
Work on this project was completed by RPA Principal Mining Engineer James
Hendry, P.Eng., RPA Consulting Geological Engineer Luke Evans, M.Sc., P.Eng, and
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Gerd Wiatzka, P.Eng., Principal, Manager Mining with SENES Consultants Limited
(SENES).
Mr. Hendry, Mr. Evans, and Mr. Wiatzka are Qualified Persons in accordance with
the requirements of NI 43-101. Mr. Hendry, Mr. Evans, and Mr. Wiatzka visited the
Mount Fubilan Mine from March 7 to 11, 2005.
Technical documents and reports on the property were reviewed and obtained from
OTML personnel at the site.
PROPERTY STATUS The Mount Fubilan Mine property comprises two contiguous mineral licenses
covering an area of 21,700 ha, one Special Mining Lease (SML), twenty Leases for
Mining Purposes (LMP), and one Special Mining Easement (SME) that collectively
cover an area of approximately 14,959 ha. All of the leases have been surveyed.
Special Mining Lease 1 and Lease for Mining Purposes 1 are being renewed currently
under the Mining Act for a further 21 years to May 2022. Fifteen expired surface leases
have been submitted for surrender. Other leases are current, and OTML expects all
surface and dredging operation lease agreements to remain for the life of the Mt. Fubilan
operation.
Exploration Licences have two year terms and can be renewed under the terms of the
Mining Act.
ENVIRONMENTAL AND PERMITTING STATUS The mine operates under the direction and obligations of the Mining Ok Tedi
Agreement Act Chapter 363 (the Ok Tedi Agreement Act) and supplementary
amendments.
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The regulatory regime is as set out in the the OTML Environmental Regime of
December 2001 which was put in place through passage of the Ok Tedi Mine
Continuation (Ninth Supplemental Agreement) Act. This agreement specifies the basis
for continuation of operations and the requirements for environmental and social impact
mitigation under the following principal components:
• Environmental Regime 2001
• PNG Sustainable Development Program
• Community Mine Continuation Agreements
• Ok Tedi Development Foundation
• Mine Closure Sinking Fund.
This regime put into place a work program of activities designed to improve the
understanding of potential mitigative measures. The environmental regime comprises
major management programs including Acid Rock Drainage (ARD), riverine ecology and
industrial sites. The regime is based on a set of values against which ongoing impacts are
assessed. These values relate to all aspects of the safety of the aquatic and terrestrial
environment.
Schedules 1 and 2 of the Ninth Supplement Agreement set out the key environmental
performance requirements for OTML, including closure and decommissioning standards.
The Community Mine Continuation Agreement (CMCA) was enacted by the PNG
government in 2001 and is monitored by independent non-government organizations.
The CMCA provides the framework for setting out the expected impacts of the OTML
operations as negotiated and agreed with the communities respective to ongoing
operations. Parties to the agreement include all local and national administration
stakeholders. CMCAs cover nine regions including 156 villages. They provide a mix of
benefits for landowners affected by the mine, including compensation for past and
current impacts as well as initiatives for sustained development beyond the life of the
mine.
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The PNG Sustainable Development Program and the Ok Tedi Development
Foundation have been set up as 40-year trust funds and are a means whereby funds will
be channelled back to the local communities and to the nation as a whole during
operations and post closure.
The Mine Closure Sinking Fund, which is known as the Ok Tedi Financial Assurance
Fund, is set aside in biannual contributions to handle the $100 million closure cost
estimate as accepted by the PNG government. Contributions commenced in July 2002
and currently stand at $36,057,664.
Finally, OTML operates a number of programs that provide advice and assistance for
local agriculture, health and education, and community development.
GEOLOGY AND MINERALIZATION The regional geologic setting comprises the northern margin of Proterozoic-Paleozoic
basement rocks of the Australian continent overlain by a fold-thrust belt of Mesozoic and
Tertiary platform cover rocks. Miocene-Pleistocene igneous intrusives within this belt
host major mineral-producing districts of the area including Ok Tedi (Mount Fubilan),
Ertsberg, Porgera, and Kare. Regional geology surrounding Ok Tedi is dominated by
continental margin marine sedimentary siltstones, mudstones, and limestones. These
sediments were deposited from the Cretaceous to mid-Miocene in an extensional
framework.
Emplacement of the Pliocene Sydney Monzodiorite is believed to have produced the
Ok Tedi skarns through metasomatic replacement of limestone/carbonate facies by
reaction with magmatic fluids. The Sydney Monzonite is relatively unaltered and
contains limited economic gold and copper mineralization, although it is enriched near
the Fubilan monzonite porphyry contact. The fault network provided conduits for
magma and intrusion by multiple phases of variably mineralized calc-alkaline stocks with
In RPA’s opinion, the technical assessment carried out by OTML in preparing the
mineral reserve estimate has been thorough and complete in dealing with the complex
issues surrounding the Ok Tedi operations. RPA concludes that the Mineral Reserves as
estimated, based upon the 13D4 pit design, represent Proven and Probable Mineral
Reserves consistent with the definitions set out in NI 43-101 and specified in the CIM
Standards on Mineral Resources and Reserves Definitions and Guidelines adopted by the
CIM Council on August 20, 2000.
CURRENT MINE OPERATIONS The current mining operations of Ok Tedi Mining Limited are carried out at the
Mount Fubilan open pit using conventional open pit mining methods and equipment. As
of the end of December 2004, the main mining activities were being carried out on the
1550 m, 1565 m, and 1580 m benches in the main mining zone. Mining was also active
in the Moscow Ridge and Paris limestone quarry areas located adjacent to and above the
south end Paris waste dump site.
At the Mount Fubilan pit, waste rock material is hauled to the south end of the pit
where it is dumped and pushed over the edge of the topography. The material then slides
down the slope to lower elevations. Permanent dumps for accumulation and storage of
waste rock materials have not been established due to the steep topography and poor
ground stability conditions surrounding the Mount Fubilan mine.
The high rate of rainfall introduces substantial quantities of surface water into the
operation, and pit water management is one of the key components of the mining system.
At the present time, the rate of total material movement is primarily limited by the
capacity of the truck fleet. There is surplus excavator capacity.
MINERAL PROCESSING AND METALLURGY OTML operates a mill with a nominal capacity to process 80,000 tonnes of ore per
day. Ore is crushed and ground for treatment, and recovery of copper and gold values is
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achieved through a conventional flotation circuit to produce a high grade copper and gold
concentrate. The copper concentrate is pumped via an overland pipeline that delivers the
concentrate to the Kiunga dewatering and concentrate storage facilities located
approximately 157 kilometres to the east of the mine site. The pipeline has a capacity of
2,400 tonnes of concentrate per day.
Tailings are disposed of via the unconfined end of the pipe discharge to Harvey
Creek, which drains to the Ok Mani, and then eventually to the Ok Tedi and Fly Rivers.
The original project design called for the construction of a tailings dam (Lukwi) and a
conventional mine tailings management system. Successful construction of a tailings
dam structure was prevented by the natural instability of the terrain due to poor rock
strength characteristics, steep topography, and very high rates of precipitation. The
original design concept was abandoned and replaced with the present riverine disposal
system.
The discharge of rock and sand into the river has filled the Ok Tedi river bed
significantly and has raised its upper regions by many metres. Dredging of the river
sediment has become necessary to maintain a navigable channel for concentrate barges,
and for reducing the incidence of forest dieback due to flooding. OTML operates a
continuous river dredging operation at Bige on the Fly River. Dredged materials
including fine sediment and tailings are stockpiled in the areas adjacent to the river.
ENVIRONMENT In RPA’s opinion, OTML is doing excellent work in managing the environmental
impacts of the Mount Fubilan operation. The company recognized at the outset the
considerable problems arising from disposal of mine waste, and has engaged local,
national and international cooperation to conduct ongoing scientific studies in
environmental mitigation.
Mining at Ok Tedi has caused significantly greater environmental impacts than was
projected in the initial development stage. The key impact issues are:
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• 60– 90 million tonnes per annum of waste rock and tailings are discharged into the Ok Tedi River system with the legal approval of the PNG government.
• Build up of mine-derived sediment has raised the elevation of the riverbed,
resulting in over-bank flooding, vegetation dieback, and shallowing of the navigable waters. The fish habitat is being impacted in places by sediment.
• Acid Rock Drainage (ARD) has recently been identified as a potential
problem due to the oxidation of sulphides present in dredge stockpiles. Mitigation measures are now being identified and evaluated.
Numerous environmental, health, and engineering studies have been undertaken to
investigate the impacts of the Mount Fubilan operation. These studies have focused
primarily on the challenges associated with mine waste and process tailings impacts.
All stakeholders associated with the project, including the PNG government, the local
community, OTML, the World Bank, and NGOs have recognized the impact that the
operation is having on the associated areas. At the same time they recognize the
significant impact that would result from a cessation of operations. The stakeholders
have agreed to continue the operation while striving to minimize and mitigate both
current and long-term environmental impacts. This will be achieved through using
current best practice measures and by continuing scientific research.
RPA believes that OTML is pursuing these goals and that the impacts are being
managed consistent with the objectives set out in various agreements supporting the
operation.
MINE CLOSURE OTML set out its plans for mine closure in 1998 in a conceptual Rehabilitation and
Closure Plan. After many workshops and full discussions with interested parties, OTML
prepared a document entitled “Social and Sustainable Development Issues in Relation to
Mine Closure”. This was reviewed and accepted by the PNG government agencies, and
the “2002 Draft Mine Closure Plan” was approved by the Minister for Mining in August
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2003 and by the Minister for Environment and Conservation in May 2004. The closure
plan is the basis for the OTML Internal Mine Closure Planning Committee (IMCPC)
consultation with local communities.
The 2002 Draft Closure Plan estimated that the cost for closure of the sites would be
approximately $150 million. RPA understands that a revised closure plan has been
reviewed and accepted by the PNG government that sets out a revised estimate of
US$100 million. Financial assurance provisions require that funds be set aside in
biannual contributions to the Ok Tedi Financial Assurance Fund (FAF) to be held jointly
by the State and OTML. At present, the FAF stands at $36,057,664, with contributions
from July 2002 to January 2005. Impact management and site closure plans are currently
under review for the tailings sediment stockpile, and additional closure costs may be
incurred. RPA estimates that the latter could add between $40 and $80 million to the
overall cost.
CAPITAL COSTS A capital cost estimate totalling US$243 million has been provided for in the life of
mine plan based on the estimates presented by OTML. These include replacement
equipment and ongoing support items. One-time capital projects provided for within this
estimate encompass relocation of the Taranaki crusher and conveyor system, pit
dewatering, a new mill process control system and flotation optimization, and additional
power generation capacity. In the capital cost of $150 million for site closure in the last
year of mine life, RPA has included provision for the Bige tailings site to be closed along
with the mine and mill operations site.
OPERATING COSTS OTML has carried out a detailed analysis of historical operating costs to provide the
basis for estimating future costs. Unit mining costs are projected to range from $0.75 per
tonne mined in 2005, climbing to the highest level of $1.10 per tonne in the last year of
operation in 2013. Mining costs are forecast to average $0.82 per tonne over the
remaining nine years of mine life. Projected unit mining costs incorporate efficiency
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improvements in haulage fleet productivity to reduce unit costs from the current level of
$0.84 per tonne.
Mill operating costs have been estimated based on the forecasts developed by OTML
in their 2004 Reserve Support Document. Unit milling costs are provided for each of the
primary ore types, reflecting their individual throughput rates and reagent consumption
factors. The mill costs are forecast to vary over a fairly narrow range between a low of
$1.78 per tonne milled to a high of $1.82 per tonne milled with the average over the nine
year life at $1.80 per tonne milled.
Operating costs for concentrate handling, including storage, barging, and reloading
onto export vessels, are forecast at $55.52 per tonne of concentrate.
Other support costs based on the 2004 Reserve Support Document, OTML 2005 – 3
Year Business Plan and on current experience are summarized in Table 1-3:
TABLE 1-3 SUPPORT COST ESTIMATES Inmet Mining Corporation Mount Fubilan Mine, Papua New Guinea
Item $ million per year
Dredging $30.4
Technical Services $7.7
Diesel power generation $19.3
Environment $2.5
Commercial Group (logistics, accounting, senior management) $64.2
Community and Business Support $42.5
Total $166.6
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PROJECT ECONOMICS RPA has developed a project development scenario based on the December 2004
Mineral Reserves and on capital and operating cost estimates.
Table 1-4 presents the Ok Tedi life of mine cash flow projection:
2005 2006 2007 2008 2009 2010 2011 2012 2013 Total
6 LMP 17 Lower OK Tedi Gravel Pit South 5.5 28/12/2004 Under Renewal, Application Lodged 21/09/2004
7 LMP 22 Yuk Creek Mini Hydro 6.826 28/12/2004 Under Renewal, Application Lodged 21/09/2004
8 LMP 25 Rumginae Gravel Pit Extension 118.81 3/4/2006 Current9 LMP 27 Kumsumbip Gravel Pit (Km 142.5) 38.21 10/8/2010 Current10 LMP 28 Tabubil Plateau Extension (Eastern Escarpment) 219.1 Period tied to SML 1 Current11 LMP 29 Daplan Creek Water Supply 4.507 12/12/2011 Current12 LMP 31 Kuambit Environment Station 0.2404 Period tied to SML 1 Current13 LMP 32 Krohoi Environment Station 0.4736 Period tied to SML 1 Current14 LMP 33 Hukit Environment Station 0.1316 Period tied to SML 1 Current15 LMP 36 Tabubil East Extension 6.599 Period tied to SML 1 Current16 LMP 37 Dredge Trial/Mine waste camp 2,116 Period tied to SML 1 Current17 LMP 73 Alice Gravel Pit Extension 0.796 Current18 LMP 74 Haidauwogam Environmental Station 0.0435 Current19 LMP 75 Tabubil Escarpment Extension (down to Ok Tedi
River)153.96 Current
20 LMP 76 Alice Gravel Pit Access Road 0.825 Current21 LMP 79 West Bank – Sand Storage. 1,504.23 Period tied to SML 1 Current22 SME 4 Yuk/Dablan Creek Pipeline Easement. 3.165 Period tied to SML 1 Under Renewal
Total 14,959
NotesSML Special Mining LeaseLMP Lease for Mining PurposesSME Special Mining Easement
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EL 581
EL 581
EL 1337
SML 1
LMP 1
LMP 26
Mt Anju
Mt Robinson
Tabubil Township Lease
Tabubil - KiungaRoad
Mine Access Road
Ok Mani River
Ok
Ted
iR
iver
Lukw
i Acc
ess
Road
Ok MengaHydro Plant Lease
Powerhouse Area
Ok MengaDam
Thermal Power Station
Industrial Area
ConstructionCamp
MineArea
Gold ProcessFacility
Ok NingiDam
Worlshop
5°10’0” S5°10’0” S
TABUBIL
320,0
00
E
310,0
00
E
300,0
00
E
340,0
00
E
330,0
00
E420,000 N
410,000 N
400,000 N
430,000 N
141°0
’0”
E
5°15’0” S
141°1
0’0
”E
141°30’E141°00’E
5°30’S
Tabubil
Fly
River
Ok
Ma
Ok
Tedi
Kiunga
Ningerum
Folomian
IRIA
NJA
YA
MINE
SITE
6°00’SPA
PU
AN
EW
GU
INE
A
0 30 km
Madang
145° E
Port Moresby
155° E
10° S
150° E
5° S
Ok Tedi
BIGE
KIUNGA
LMP 79
LMP 37
Ok
Tedi
River
FlyRiver
141°E
6°00’S
IRIA
NJA
YA
PA
PU
AN
EW
GU
INE
A
0 4 20
Kilometres
8 12 16
N
June 2005
Ok Tedi Mine
Exploration Licenses& Surface Leases
Inmet Mining Corporation
Papua New Guinea, South Pacific
Figure 6-2
0 2 10
Kilometres
4 6 8
N
Legend:
Road
Drainage
RO
SC
OE
PO
ST
LE
AS
SO
CIA
TE
SIN
C.6
-6
ww
w.rp
aca
n.co
m
TABLE 6-2List of Expired Surface Leases With Applications for Surrender
Inmet Mining CorporationMount Fubilan Mine, Papua New Guinea
LeaseCount Number Lease Description Area (ha) Expiry Date Status
SOCIAL COMMITMENTS AND IMPLEMENTATION The CMCAs provide a mix of benefits for landowners affected by the mine that
includes compensation for past and current impacts as well as initiatives for sustained
development beyond the life of the mine. The mix of benefits acknowledges the need to
provide for the landowners’ families well beyond the mine's economic life, and that
replacement economic support must begin immediately. Activities in this respect have
included the following:
COMPENSATION AND SUSTAINABILITY
Before 2001, the only offset compensation was the Fly River Development
Trust and the Highway Development Trust, both of which have since been rolled
into the CMCAs.
The CMCAs cover nine regions that include 156 villages. The agreements
resulted from meetings and discussions with villagers, comprising at least two
consultation visits and sign off by 2 representatives of each village. As a result of
the agreements multiple community offsets are now in place, including:
• 9th Trust Mine Continuation Agreements (MCAs), which for most communities have 3 components to them, namely:
Cash component (not all) Investment Component (at closure, goes to development) Development Component.
• 8th Trust MCA provided for flooding and sedimentation impacts due to
production of mine waste and lease compensation.
• Lower Ok Tedi Agreement that deals with agreed settlement for dieback and development.
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GOODWILL AND SUSTAINABILITY In addition to the community offset agreements outlined above, OTML also has a
number of goodwill programs underway that include for example:
• Food Security – food programs to help people stay in “home” areas for longer periods and agriculture training and support.
• Health and Education – provision of local community health programs,
mobile floating clinics, addressing malaria, TB, HIV/AIDS, upper respiratory diseases.
• Community Development training programs.
CLOSURE REQUIREMENTS
OTML commenced planning for mine closure in 1998 with a conceptual
Rehabilitation and Closure Plan. After many workshops and comprehensive discussions
with interested parties, OTML prepared a submission entitled “Social and Sustainable
Development Issues in Relation to Mine Closure”. This was subsequently accepted by the
State, and the “2002 Draft Mine Closure Plan” was approved by the Minister for Mining
in August 2003 and by the Minister for Environment and Conservation in May 2004. The
mine closure plans and supporting discussion have been used by the OTML Internal
Mine Closure Planning Committee (IMCPC) as the basis for community consultation and
subsequent preparation of the draft mine closure plan.
The first estimate of the closure cost totalled approximately $US150 million,
primarily for the mine and mill operations sites. RPA understands that the PNG
government had accepted a required closure cost estimate of US$100 million. A
Financial Assurance program is currently in place where OTML biannual contributions
are made to the Ok Tedi Financial Assurance Fund (FAF), held jointly by the state and
OTML. The FAF funds are to be used for the final closure, reclamation and
rehabilitation required after the operations cease. The FAF currently stands at US$36
million accumulated through contributions from July 2002 to January 2005.
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7 ACCESSIBILITY, LOCAL RESOURCES, PHYSIOGRAPHY AND INFRASTRUCTURE
ACCESSIBILITY
Tabubil can be accessed via air and boat/road from Port Moresby. The primary
means of transporting personnel is via an OTML aircraft which provides regular flights
between Tabubil and Cairns Austalia, Port Moresby and smaller communities in the
immediate vicinity. Concentrate products and freight are primarily transported via river
barge between tidewater and Kiunga located on the Fly River at a distance of more than
800 km. From Kiunga freight is transported to the operation site via an all weather gravel
road approximately 137 km. Copper concentrate is transported by pipeline, in slurry
form, from the concentrator to Kiunga, where it is dewatered and loaded onto the barges
for transport and reloading into ocean going ships. Access between Tabubil and the
Mount Fubilan operations site is via the Mine Access Road (Figure 6-2).
CLIMATE
In Tabubil, temperatures range from a mean of 20° C at night to a daytime average of
27° C. Extremes of 12° C and 39° C have been recorded. Rain falls 339 days each year
and averages 8,000 mm per annum at Tabubil and approximately 10,000 mm per year at
Mount Fubilan, making this area one of the wettest places on earth. There is a
pronounced wet season from October to March. The high rainfall has enhanced
vegetation growth with moss forest and dense, broad leaf undergrowth.
LOCAL RESOURCES
Tabubil is a town that was established by OTML as a residential and support base for
the mine. The community has primary and secondary schools, churches, a hospital, a
supermarket, sporting facilities, a golf club, and a large number of locally-owned
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businesses. People from all over PNG come to Tabubil for employment. Tabubil has a
population of about 10,000 people, making it the largest settlement in western PNG. The
Western Province is the most sparsely populated province in PNG with an estimated total
population of 155,000.
OTML operates its own hydro-electrical power generation plant on the Ok Menga
River (Figure 6-2).
FIGURE 7-1 AIR PHOTO OF TABUBIL (PHOTO FROM WWW.OKTEDI.COM)
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INFRASTRUCTURE
The Mount Fubilan mine infrastructure is shown in Figure 7-2.
FIGURE 7-2 MOUNT FUBILAN SITE AND TABUBIL IN BACKGROUND
PHYSIOGRAPHY
The mining activities are centred on Mount Fubilan, which had a pre-mining peak
elevation of 2,095 m. The area experiences high rainfall and is characterized by near-
vertical cliffs surrounded by dense tropical rain forest. The terrain is mountainous, with
local relief of 1,500 m or more. Ridges are typically narrow with very steep flanks.
Mount Fubilan lies within the southern foothills of the Star Mountains, which rise to
4,000 m above sea level and form the watershed divide between the Sepik and Fly rivers.
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8 HISTORY In 1963, a government patrol made first contact with the Min people of the Star
Mountains and noticed signs of copper mineralization near the present mine site. In 1968
the Mount Fubilan copper-gold deposit was discovered. In 1969, geologists from the
Kennecott Copper Corporation were issued a prospecting authority over the area
From 1969 to 1971 diamond-drilling programs established ore reserves; however,
Kennecott and the PNG Government could not reach agreement on terms to develop the
mine and in 1975 Kennecott withdrew from the project. In 1976, the Broken Hill
Proprietary Company Limited (BHP) of Australia entered into negotiations with the PNG
Government, and subsequently the government passed the Mining (Ok Tedi Agreement)
Act and an international consortium was formed to assess the feasibility of developing a
gold and copper mining operation. A ten-volume feasibility study was prepared and
presented to the PNG Government in 1979.
In February 1980 the national government approved the project and exercised its
option to take up a 20 per cent shareholding, and in June the Ok Tedi Supplemental
Agreement Act was passed. In 1981, Ok Tedi Mining Limited (OTML) was incorporated
to develop and operate the project, a lease was granted to OTML, and the construction
began. The development program took almost eight years and cost US$1,400 million.
The operation was planned to be developed in three phases:
• Phase 1: construction of the mine site infrastructure, including 170 kilometres of roads, a tug and barge system with full port facilities at Kiunga to operate over 1,300 kilometres of river and sea, and the Tabubil township, and mining of the gold ore capping the main copper deposit.
• Phase 2: development of separate treatment facilities for the copper ore,
construction of the hydroelectric power station, and provision of river transport and export loading facilities for copper concentrates.
• Phase 3: increased copper production and shutdown of the gold circuit after
exhaustion of the gold cap.
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The third (current) stage involves mining of sulphide copper-gold ore, which includes
porphyry and skarn mineralization. Table 8-1 summarizes the production history.
TABLE 8-1 MOUNT FUBILAN MINE PRODUCTION HISTORY Inmet Mining Corporation Mount Fubilan Mine, Papua New Guinea
The Ok Tedi porphyry copper prospect, now known as the Mount Fubilan mine, was
discovered by Kennecott Copper Corporation (Kennecott) in June 1968. Kennecott
geologists D. Fishburn and J. Felderhoff, on helicopter reconnaissance exploration,
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discovered mineralized float at the confluence of the Ok Tedi and Ok Menga rivers and
traced it back to its source in the Mount Fubilan region. Exploration lapsed from 1972 to
1975 while Kennecott and the PNG government negotiated future mining terms. During
this period of initial exploration and negotiations on possible development of the deposit,
PNG itself was undergoing the change from colonial rule to self-government and finally
to full independence in September 1975. Negotiations failed in March 1975 when the
PNG government announced their refusal to renew the prospecting authorities that
covered the deposit and that had been held by Kennecott since 1968. Over the following
15 months, the government carried out exploration under the supervision of Behre
Dolbear and in 1976 entered into an agreement with an international consortium of
companies led by the Broken Hill Proprietary Company Limited (BHP) for final
feasibility studies (Howell et al., 1978).
Exploration continues at the present time with diamond drilling, specifically in the
immediate proximity of the Mount Fubilan mine.
HISTORICAL MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES
The recent historical OTML Mineral Resource and Reserve estimates are summarized
below. RPA has not reviewed the historical estimates in detail and cannot comment on
their reliability. They are presented only as relevant historical information. OTML has
used the classification conventions of the Australasian Code for Reporting of Identified
Mineral Resources and Ore Reserves (the JORC Code-1996). The Australian JORC
Code (1996 and 2004) resource and reserve classification definitions are similar to the
Canadian CIM (2000 and 2004) definitions.
Table 8-2 presents a summary of the June 2002, December 2003, and June 2004
resource estimates. A significant increase in the global resource occurred in June 2004
due primarily to a lowering of the cut-off grade. SRK audited the December 2003 and
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the June 2004 resource and reserve estimates and identified no material flaws (SRK,
2004a and 2004b).
TABLE 8-2 RECENT HISTORICAL MINERAL RESOURCE ESTIMATES Inmet Mining Corporation Mount Fubilan Mine, Papua New Guinea
Date Classification Tonnes
(Mt) Cu (%)
Au (g/t)
June 2002 Measured 470.6 0.87 0.96 June 2002 Indicated 217.6 0.55 0.65 June 2002 Inferred 15.5 0.46 0.46 June 2002 Total Mineral Resource 703.6 0.76 0.85
December 2003 Measured 432.2 0.87 0.97 December 2003 Indicated 215.8 0.56 0.65 December 2003 Inferred 15.4 0.46 0.46 December 2003 Total Mineral Resource 663.5 0.76 0.85
June 2004 Measured 375.1 0.79 0.92 June 2004 Indicated 352.7 0.56 0.67 June 2004 Inferred 176.4 0.49 0.68 June 2004 Total Mineral Resource 904.1 0.64 0.78
The resource estimates all have been based on geological interpretations developed in
2000 and 2001 and are reported as all material between the then current topographic
surface and a base datum of 1153 m elevation.
Table 8-3 summarizes the recent historical Mineral Reserve Estimates.
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TABLE 8-3 RECENT HISTORICAL MINERAL RESERVE ESTIMATES
Inmet Mining Corporation Mount Fubilan Mine, Papua New Guinea
Date Classification Tonnes (Mt)
Cu (%)
Au (g/t)
June 2002 Proven 253.9 0.90 0.94 June 2002 Probable 34.1 0.57 0.67 June 2002 Total Mineral Reserves 288.0 0.85 0.91
December 2003 Proven 214.6 0.91 0.97 December 2003 Probable 31.5 0.58 0.67 December 2003 Total Mineral Reserves 246.1 0.87 0.93
June 2004 Proven 239.4 0.84 1.03 June 2004 Probable 24.7 0.75 1.27 June 2004 Total Mineral Reserves 264.1 0.84 1.05
The reserve estimates are each based on the then current pit limit designs and the
mining elevations at that time.
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9 GEOLOGICAL SETTING REGIONAL GEOLOGY
The Ok Tedi mineral district lies at the fringe of the northwest trending physiographic
province in the southwestern region of PNG. The regional setting comprises the northern
margin of Proterozoic-Paleozoic basement rocks of the Australian continent overlain by a
fold-thrust belt of Mesozoic and Tertiary platform cover rocks. Miocene-Pleistocene
igneous intrusives within this belt host major mineral districts of the area, including Ok
Tedi (Mount Fubilan), Ertsberg, Porgera, and Kare. A belt of greenschist facies
metamorphic slates and phyllites occurs to the north. Unmetamorphosed overthrust slabs
of Eocene oceanic crust and Miocene volcanic rocks unconformably overlie the
metamorphic rocks. Island arc type volcanic rocks with wedges of basement oceanic
crust occur beyond the metamorphic rocks, fringing the PNG coastal range.
Regional deformation, metamorphism, and igneous activities accompanied a
southwest-northeast tectonic compression contemporaneous with north-west trending
basement core uplift. A prominent northeast-southwest trending regional structure
governs the attitudes of the steeply dipping north to northeast trending fractures,
dilational faults, and fractures. Igneous, hydrothermal activity and mineralization are
associated with the deformation events in the region.
Regional geology is dominated by continental margin marine sedimentary siltstones,
mudstones, and limestones. These sediments were deposited from the Cretaceous to mid-
Miocene in an extensional framework. The fault network provided conduits for magma
and fluid during subsequent reactivation.
Post depositional (<12 Ma) regional compression occurred in response to the oblique
convergence of the Australian Plate to the south and Pacific Plate to the north. This
compression produced regional folding and reactivation of the extensional structural
framework.
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Emplacement of regional intrusive complexes along faults commenced approximately
2.6 Ma and continued intermittently until 0.7 Ma. Two major intrusives are recognised in
the region, including the Miocene - Pliocene Mount Ian Intrusive Complex in the
Townsville area and the younger Pliocene-Pleistocene (2.6Ma -1.1 Ma) Star Mountains
Intrusive Complex at Ok Tedi, in the Mount Frew and Mount Kwang areas.
The Mt. Ian Intrusive complex is zoned and comprises a younger gabbroic core (1.9±
0.2 Ma) which grades outward into older (12.9 Ma) monzodiorite, diorite, and andesitic
porphyries on the margins. The intrusives occur mainly as relatively flat lying sills and
as minor stocks and dikes. The regional thrust fault systems appear to have strong
control on the geometry of the flat lying intrusives.
The continued regional and localized compression produced reactivation of some
fracture sets, rapid uplift, and subsequent erosion and supergene enrichment.
PROPERTY GEOLOGY
The geological setting for the Ok Tedi mineralization consists of sediments intruded
by multiple phases of variably mineralized calc-alkaline stocks with contemporaneous
skarn formation (Figure 9-1).
Ieru Formation siltstone (mid-to-late Cretaceous) represents the dominant
sedimentary unit in the current OTML operation.
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FIGURE 9-1 OK TEDI PROPERTY GEOLOGY
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Darai Limestone (late Oligocene to early Miocene) was thrust both within (Parrot’s
Beak Thrust) and above (Taranaki Thrust) the Ieru Formation during a period of
compression and structural reactivation.
Pnyang Formation mudstones and siltstones (middle Miocene) conformably overlie
the Darai Limestone and display a gradational and variable facies change from
moderately carbonaceous near the basal contact to weakly or non-carbonaceous away
from the contact.
Sydney Monzodiorite (2.6 Ma) is the earliest and most extensive intrusive stock in the
Ok Tedi complex. It is porphyritic to equigranular in texture and contains andesine,
clinopyroxene, orthoclase, hornblende, and biotite with accessory sphene, apatite, and
magnetite. It is relatively unaltered and contains limited economic gold and copper
mineralization, although it is enriched near the Fubilan monzonite porphyry contact.
Hornfelsed Ieru siltstones displaying limited propylitic alteration and monzodiorite
siltstone breccias occur peripheral to the intrusion.
Emplacement of the Sydney Monzodiorite is believed to have produced the Ok Tedi
skarns through metasomatic replacement of limestone/carbonate facies by reaction with
magmatic fluids.
Skarns have formed along thrust faults proximal to the Sydney Monzodiorite with
more massive skarn bodies located along high angle monzodiorite-limestone contacts.
Skarn mineralization is characterized by an inner calc-silicate garnet and pyroxene
alteration of monzodiorite (endoskarn), a central massive magnetite pyroxene phase
which grades to massive sulphide and limited calc-silicate alteration at the outer contact
mineralization, sometimes with chalcocite, digenite and covellite enrichment. Gold is
closely associated with the copper mineralization in the skarns and intrusive rocks. A
department study suggests that much of the gold mineralization associated with massive
pyrite-marcasite skarn is refractory, being contained within pyrite-marcasite and
magnetite minerals.
Mineralization was significantly enriched through supergene processes. Oxidation
and leaching produced a gold-rich leached cap underlain by a supergene enriched copper
zone of chalcocite and digenite merging downwards into lower grade chalcopyrite-
dominated protore mineralization. Oxidation of copper and iron sulphides released
sulphate copper, which was then transported downward by meteoric water percolation.
In a reducing environment at or below the water table, the copper precipitated as
chalcocite and digenite, mostly as rinds on fresh chalcopyrite and to a lesser extent on
pyrite-marcasite grains. Leaching and enrichment has also occurred in the skarn bodies,
with oxidation preferentially developed to deep levels along the outer brecciated skarn
margins in contact with the Darai Limestone.
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The boundary between the zone of enrichment and primary sulphide mineralization is
gradual and diffuse, exhibiting a slow decay of enrichment with depth.
The global ratio of Au to Cu in sulphide mineralization throughout the deposit
approximates 1.1 g/t Au to 1.0 % Cu. Current mining is predominantly exploiting the
protore and displays an Au to Cu ratio of approximately 1.0 g/t Au to 1.0 % Cu.
ORE TYPES & KEY CHARACTERISTICS
The Ok Tedi orebody displays some characteristics that are deleterious to optimal
processing and production of marketable concentrate. These elements require proactive
delineation and management (OTML, 2004).
OTML is contractually bound to produce a copper-gold concentrate containing lead,
zinc, and bismuth below specific grades and a penalty clause is invoked if the maximum
acceptable fluorine grade in the concentrate is exceeded. Copper grade of concentrate is
expected to range from 27 % to 37 %.
Elevated concentrations of fluorine are present locally within the orebody. Fluorine
is concentrated from talc and phlogopite during the mill flotation process. Talc is
produced as an alteration product of tremolite that is formed within the skarn orebodies
due to prograde metamorphism of carbonate facies. Phlogopite commonly occurs within
the Fubilan monzonite porphyry as a product of potassic alteration.
Lead, zinc, and bismuth concentrations are elevated at the extremities of the porphyry
system and contact margins or fault zones within the skarn orebodies.
Precipitation of chalcocite/digenite/chalcanthite produced thin overgrowths on pyrite/
marcasite and chalcopyrite grains during secondary enrichment. The overgrowths are
commonly observed in pyrite/marcasite skarns and are attracted to chemical collectors
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during the milling process. This results in selective flotation of pyrite/marcasite grains
and production of a lower grade concentrate.
Acid soluble copper (ASCu) species such as cupriferous goethite, malachite, bornite,
chalcocite, chrysocolla, and native Cu are present in oxidized skarns, fault zones and
calc-silicate altered intrusives adjacent to skarns. Metal recovery is reduced when
processing these minerals.
Hard and blocky material requires additional milling time resulting in increased
production costs and reduced milling throughput. Hornfelsed siltstones and intrusive
lithologies with limited argillic alteration can cause milling problems.
Geological and operational controls have been implemented in the OTML systems to
manage and mitigate the effects of the various ore attributes described above on the
processing systems and the final product characteristics.
GEOLOGICAL MODELS
The current geological interpretation that is the basis for the current resource estimate
was developed in 2000 and 2001. OTML modelled the major rock types using wireframe
models. OTML is currently updating the interpretation in order to reflect the most recent
operating experience and infill drilling information. This new interpretation will provide
a new basis for the next Mineral Resource estimate.
The following are the major geological units identified and interpreted: • Siltstone - Hornfelsed, altered (potassic and argillic) and locally unaltered
siltstone of both the Ieru and Pnyang formations. Commonly sub-economic due to hardness and low grade mineralization. Ore grade mineralization is best developed along fractures in areas adjacent to intrusive rocks, in contact with skarns and in contact breccias formed proximal to the intrusive contacts.
• Limestone - The Darai Limestone unit includes unaltered limestone, marble and
fault gouge material associated with the Taranaki and Parrots Beak thrust faults. Limestone is barren and has a high acid neutralizing capacity. It is required for neutralization of sulphidic waste and tailings.
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• Monzodiorite - Sydney Monzodiorite intrusion plus younger porphyritic
monzodiorite (PMD) intrusive rocks and dikes. Mainly chalcopyrite protore but includes small zones of chalcocite enrichment, quartz stockwork and breccias. Mineralization is generally present but is mostly of sub-economic grade.
• Endoskarn - Zone of calc-silicate alteration of the monzodiorite intrusive stock.
Associated with the formation of magnetite and sulphide skarn deposits.
• Skarn - Lithology formed by metasomatic alteration of sedimentary carbonate facies at the contacts with monzodiorite and monzonite intrusions. Skarns are most extensive in the Darai Limestone unit, with smaller calc-silicate skarn zones developed within the Ieru siltstone. The dominant skarn formation was associated with the monzodiorite intrusive with a later overprinting associated with the monzonite porphyry. The skarn deposits generally contain higher concentrations of Au and Cu mineralization than the associated intrusive rocks because they reflect a more chemically reactive environment for the precipitation of sulphide minerals from emanating hydrothermal fluids. The skarn ore bodies have internal zonation characterized by inner calc-silicate mineralogy, a central massive magnetite-dominated assemblage, and massive pyrite-marcasite on the outer margins.
• Monzonite - Includes the Fubilan monzonite porphyry intrusive complex,
Southern monzonite porphyry intrusion, plus minor dikes and younger intrusive rocks. Incorporates a leached zone, barren quartz core, the majority of the chalcocite supergene zone, and significant chalcopyrite protore. This rock unit contains economic mineralization with minor areas of internal waste.
• Oxide Skarn - Oxidation of sulphide and magnetite skarn. Dominated by
ubiquitous limonite, goethite, and hematite. Also characterized by the presence of Cu oxides (azurite, malachite, and cuprite) and native Cu. Oxide skarns contain elevated levels of acid soluble Cu. Occurrence at depth is generally due to structural zones, which provided channels for descending meteoric waters. The oxide zones have limited lateral extent and are often extremely variable in grade due to inconsistent leaching and remobilization of Cu.
• Thrust Zones - Breccia and gouge zones composed of siltstone, local skarn
material and very minor limestone, commonly with sericite-clay-pyrite-marcasite matrix. Two major thrust zones identified in the model are associated with the Taranaki and Parrot’s Beak thrusts.
The main rock types in the reserve estimate are summarized in Table 11-1. The
sulphide skarns contain approximately 25% of the remaining reserve tonnage
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contributing 44% of the copper metal and 40% of the contained gold. This unit is now
the most important single component of the remaining reserve. The monzonite hosts
approximately 38% of the reserve tonnage, 22% of the contained copper, and 18% of the
contained gold.
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TABLE 11-1 MAIN ROCK TYPES IN RESERVE ESTIMATE
Inmet Mining Corporation Mount Fubilan Mine, Papua New Guinea
Lithology Name
Colour Legend for Figure 11-1
Percent of Total Reserve Tonnage
Percent of Total Reserve Copper Metal
Percent of Total Reserve
Gold Metal
Siltstone Pnyang-cyan, Ieru-green 0.5% 0.4% 0.3%
Limestone Darai-blue 0.0% 0.0% 0.0%
Monzodiorite Brown 14.6% 6.3% 7.2%
Endoskarn Magenta 12.6% 13.3% 13.5%
Pyrite Skarn Orange 9.2% 13.6% 21.0%
Sulphide Skarn Orange 24.7% 44.0% 39.8%
Monzonite Pink 37.8% 21.8% 17.5%
Oxide Skarn Not Shown 0.6% 0.5% 0.8%
Thrust Zones Yellow 0.0% 0.0% 0.0%
Total 100.0% 100.0% 100.0%
A 3-D perspective that shows the geological wireframes at the December 2004 pit
topography is given in Figure 11-1. A lithological colour legend is included in Table 11-
1. All of the skarns are shown in orange.
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FIGURE 11-1 3-D PERSPECTIVE OF THE WIREFRAMES ON DECEMBER 2004 PIT TOPOGRAPHY
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12 EXPLORATION The chronology of exploration at the Mount Fubilan mine has been described above
under History.
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13 DRILLING The exploration drill hole database is composed of both core and reverse circulation
drill hole data dating back to the earliest exploration drilling by Kennecott (1968 to
1971). From 1969 to 2005, some 889 diamond drill holes totalling 203,261 m and 2,116
reverse circulation holes totalling 97,275 m were drilled in the Mount Fubilan area.
Some of the short diamond drill holes and most of the reverse circulation holes are
only relevant in areas that have been mined out and these holes have been excluded from
the current resource database. The assays in these excluded holes, which are mostly
associated with the gold cap zone, would not influence the current resource estimate in
any case. The current resource estimate is supported by 647 drill holes and 320 reverse
circulation drill holes.
Drill hole spacing is generally targeted on a 70 m by 100 m grid for intrusives and 50
m by 50 m grid for skarns. Typically complex ore zones have increased drill hole
density. Drill holes are spaced further apart around the margins of the deposit and in
waste areas.
OTML has evaluated the use of blasthole assays to support resource estimation;
however it was found that they produced less reliable results. Consequently, the current
resource estimate does not use blasthole data.
DRILL CORE LOGGING
Drill core is logged and described in detail. The intervals and logging codes have
been entered into the drill hole database. Collar location, downhole surveys, and assay
results are also recorded in the database.
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A review of some of the historical logs indicates that the geological information is
complete and of good quality. In RPA’s opinion, the graphical drill logs by OTML,
Behre Dolbear, and Kennecott are of high quality.
DRILL CORE SIZE
All recent and current drilling is diamond core drilling, with the greater part of the
remaining resource being estimated from this method of drilling. Diamond drill holes are
generally drilled in PQ (85 mm) diameter and completed in HQ (63.5 mm) and less
commonly NQ (47.6 mm).
COLLAR SURVEYS
All of the diamond drill holes and most of the reverse circulation holes related to the
resource estimate have collar surveys recorded. Some reverse circulation holes and a few
of the older diamond drill holes do not appear to have been surveyed. Although it is
preferable to survey all drill hole collars to minimize location uncertainty, RPA believes
that most of the unsurveyed collar coordinates are likely within a few metres of their
planned locations. This level of accuracy is acceptable considering that the drill holes are
generally spaced at 50 m to 100 m apart.
DOWNHOLE SURVEYS
Drill holes are surveyed via the Eastman single-shot method. General practice is to
have surveys taken within 20 metres of the surface and then repetitively at intervals of 40
m to 100 m down hole. RPA notes that approximately one third of the diamond drill
holes that support the December 2004 resource estimate have no downhole survey
measurements. The drill hole deviations, however, are generally minor due to the large
diameter drill rods used and because most of the drill holes are collared with vertical to
near-vertical orientations.
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CORE RECOVERY
OTML reports that core recovery is generally good across all lithologies. Overall
recovery is summarized in Table 13-1.
TABLE 13-1 DIAMOND HOLE CORE RECOVERY (FROM OTML (2004) Inmet Mining Corporation Mount Fubilan Mine, Papua New Guinea
Routine assaying of the ASCu grade is carried out for all diamond drill samples with
a total Cu grade exceeding 0.2 percent and for all skarn and endoskarn lithology blasthole
samples. These procedures have not always been followed, and significant areas in the
deposit have no ASCu assays.
SECURITY
All drill core and assay samples are stored on the mine site, which has its own gated
security.
ASSAY QUALITY CONTROL AND QUALITY ASSURANCE
A quality assurance (QA) and quality control (QC) check program was developed and
implemented in 2001. A suite of standards prepared from samples of the two major rock
types (monzonite porphyry and skarn) across a range of ore grades was prepared and
analyzed by the Geostats Sample and Assay Monitoring Service, Australia. In April
2003, a suite of monzonite porphyry certified standards was produced by Ore Research
Australia. These Cu-Au reference standards have routinely been inserted into the sample
stream since July 2003 at a frequency of approximately one in every ten samples by both
the geology department and the OTML Laboratory.
Quality controls include one OTML Laboratory blank, two OTML Laboratory
reference standards, two Geology Department reference standards and two replicates in
each batch of 25 samples for gold assays. The copper assay batches are larger, at
approximately 50 to 100 samples, and also include reference standards and replicates.
Replicates are two samples taken from the same pulp packet.
The OTML Laboratory procedures, the blast hole sampling methodology, the mine
QA/QC protocols, and other aspects were audited by Dominique Francois-Bongarcon of
Agoratek International (Agoratek) in June 2003 (Agoratek, 2003). Agoratek questioned
the reliability of some of the standards and their results and made a number of
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recommendations to improve QA/QC procedures at the mine, particularly related to
properly compiling and reporting the QC results on a regular basis.
RPA’s review of some of the more recent OTML Laboratory reference standard
graphs suggests that the copper and gold results are reliable and unbiased. The OTML
Laboratory personnel monitor the laboratories’ reference standard results and will
investigate a whole batch if a laboratory reference standard result is outside of two
standard deviations from the expected value. Batches are re-assayed if a laboratory
reference standard result is over three times the standard deviation envelope.
RPA notes that the OTML standards are in-house reference standards and the rare
erratic assays that are well outside of the mean plus or minus three standard deviations
may be due to problems with the standards and not analytical mistakes. It may be
difficult to use the in-house reference standard results to investigate for minor analytical
biases. Nevertheless, RPA recommends that OTML compile the historical laboratory and
geology reference standard results to confirm that no major analytical biases existed. In
addition, RPA recommends that OTML send several hundred pulps to an outside
accredited laboratory and consider sending pulps out on a routine basis. RPA also
recommends that the geology department designate a responsible person to compile and
monitor all the QC data, including the OTML Laboratory reference standard and replicate
results. The historical laboratory replicate data should be compiled and the relative
standard deviation values should be documented for appropriate grade ranges.
RPA recommends that OTML review its QA/QC procedures with the objective of:
• Reducing the geology reference standard insertion rate from one every ten samples to one or two per diamond drill hole or approximately one in every fifty blast hole samples;
• Using barren split core or other suitable barren material for insertion into the
sample stream as blanks at a rate of one or two per drill hole or one in every fifty blast hole samples;
• Inserting the occasional drill core or blasthole duplicates.
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16 DATA VERIFICATION MOUNT FUBILAN MINE DATABASE VALIDATION
RPA used a number of MS Access database tests, the Gemcom data validation
routine, and visual inspection to check the drill hole database. RPA found no significant
problems with the drill hole database. RPA notes that lithology data contains a
significant number of missing and zero length intervals.
RPA also recommends:
• Out of sequence intervals be cleaned up and the lithology codes be standardized,
• Some of the dates be corrected in the collar table.
MOUNT FUBILAN MINE DATABASE VERIFICATION
RPA DATABASE VERIFICATION WORK RPA checked 1,577 assay records in the drill hole database against assay certificates
and found three minor typographic errors, nine errors associated with assays that were not
entered, and four errors related to inconsistencies with replicates where the lowest assays
were used instead of the first assays. RPA also checked the collar coordinates and down
hole survey data for a number of holes with the drill logs and found no errors in the collar
coordinates. Interpolated downhole survey values in the database were similar to the
values indicated on the drill logs. It is RPA’s opinion that the Mount Fubilan drill hole
database is valid and acceptable for supporting resource estimation work.
HISTORICAL DATABASE VERIFICATION WORK
When the drill hole data was transferred to the Oracle database in 1995, some 10% of
the raw data fields were checked against the original assay records and back to the drill
logs (OTML, 2002).
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During March 2000, April 2001, and June 2002, a further 5% of the drill holes were
checked back to the original assay certificates and drill logs. The records checked
included collar data, sample intervals, copper and gold assays, lithology and survey data.
In addition, every drill hole from DDH_600 onwards was checked for proper collar
survey coordinates. OTML reported that a few minor typographic errors and numerical
transpositions were discovered and corrected and no major discrepancies were found.
OTML planned to continue to check approximately 5% or ±40 holes every year (OTML,
2002).
In May 2003, OTML checked 37 diamond drill holes, including 19 drill holes that
had already been checked in 2001 and 2002. OTML found nine minor typographic
errors, including five errors in previously checked holes (OTML. 2003). RPA notes that
eight of these errors still need to be corrected.
The SRK audit of the 2003 resource and reserve work in January 2004 and the review
of the July 2004 resource model did not include any database verification work. OTML
did not complete any database verification work in 2004.
RPA recommends that OTML continue to check approximately 5% of the drill holes
every year and that OTML retain a digital list of all of the records that have been checked
and any corrections that have been made.
RPA INDEPENDENT SAMPLING
RPA did not take any independent samples to confirm the presence of gold and
copper mineralization because the Mount Fubilan mine has a long production history.
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17 ADJACENT PROPERTIES There are no known significant deposits or mineralized zones on properties that are
immediately adjacent the OTML exploration licenses.
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18 MINERAL PROCESSING AND RECOVERY
MILL OPERATIONS
Ore produced from the mine is dumped directly into the main in-pit crusher located in
a slot on the upper portion of the eastern wall of the Mount Fubilan open pit. The run of
mine ore material is processed through a 1,524 mm x 2,794 mm gyratory crusher and
conveyed to one of the series of crushed ore stockpiles located immediately ahead of and
adjacent to the mill facilities. The mill is located on the east facing natural hillside
immediately to the east of the pit. There is a second primary crusher and conveying
facility located in the upper north east corner of the pit, referred to as the Taranaki
crusher, which is also occasionally used to crush and deliver ore to mill. This crusher is
planned to be de-commissioned in the near future leaving the operation working solely
through the main in-pit crusher.
Crushed ore is recovered from the stockpiles on an as-required basis for feeding the
primary grinding mills. The grinding section of the mill consists of two parallel
processing circuits, each consisting of a semi-autogenous grinding mill feeding two ball
mills operating in closed circuit with cyclone classifiers. The primary grind size for
feeding the flotation section of the mill is 80% passing 180 microns. The flotation circuit
includes a series of rougher and rougher-scavenger flotation stages that complete an
initial recovery of copper and gold. The flotation product from this stage is processed
through a regrind circuit and cleaner and re-cleaner flotation stages producing a high
quality copper concentrate product. A portion of the regrind circuit stream is processed
in a gravity concentrator to recover a gravity gold concentrate. The gravity gold
concentrate is shipped as a finished product to precious metal refineries separately from
the bulk copper concentrate.
Figure 18-1 illustrates a flow sheet schematic for the Ok Tedi mill.
June 2005
OK Tedi Mine
Copper Concentrator Flowsheet
Inmet Mining Corporation
Papua New Guinea, South Pacific
Figure 18-1
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The mill has a nominal capacity of 80,000 tonnes of ore per day depending upon the
particular ore type and mineral nature being processed. Harder ore types are processed at
a somewhat lower throughput rate than softer materials. The main deleterious component
in the Mount Fubilan ore that can impact copper concentrate characteristics is fluorine.
Fluorine occurs in conjunction with talc minerals in certain zones and ore types in the
deposit. In order to deal with this material the mill circuit includes a Jameson cell
flotation circuit designed to treat the fluorine content ores and maintain the final product
specifications below penalty limits. The Jameson circuit is only operated when the ore
characteristics require it.
The finished copper concentrate is thickened in a 2x40 m concentrate thickener from
which the product is pumped to a concentrate batch plant feeding the overland
concentrate pipeline system. The 150 mm diameter overland pipeline delivers the
concentrate to the Kiunga dewatering and concentrate storage facilities located
approximately 157 kilometres to the east of the mine site. The pipeline has a capacity of
2,400 tonnes of concentrate per day.
The ground rock tailings from the process are disposed of via the unconfined end of
the pipe discharge to Harvey Creek, which drains to the Ok Mani, and then to the Ok
Tedi and Fly rivers. The original project design was based on the construction of a
tailings dam (Lukwi) for tailings containment and management. The tailings dam
structure failed during construction as a result of unstable conditions in the area due to
rock characteristics, steep topography, and very high rates of precipitation. Consequently
the original tailings impoundment plans were abandoned.
The discharge of finely ground rock and sand has filled the Ok Tedi river bed and has
raised its upper regions by many metres. Over-bank flooding was common due to flatter
river grades in the lower Ok Tedi, where the river leaves the foothills of the Star
Mountains. Dredging is necessary to maintain a navigable channel in the river for
concentrate barges and to reduce the incidence of forest dieback due to flooding. OTML
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operates a continuous river dredging operation at Bige on the Fly River. Dredged
materials including fine sediment and tailings are stockpiled in areas adjacent to the river.
ORE TYPES Several different ore types present in the Mount Fubilan deposit are tracked and
monitored in the course of mining and milling the ore. These ore types display varied
and complex characteristics producing different responses and behaviours in the Ok Tedi
mill. The fundamental natures of these ore types cause dynamic changes in the
processing circuit that result in variations in mill throughput, metal recovery, and finished
MILL THROUGHPUT The mill processing rate is a key operational parameter. A significant portion
of the mill operating costs are fixed, consequently changes in throughput will
directly impact on the effective cost per tonne for treating the ore. RECOVERY
There are four key process recovery parameters that are used in developing
the economic evaluation. Recoveries have been estimated by rock type, for
sulphide copper, acid soluble copper, and gold.
FLOTATION RECOVERY OF COPPER
Two types of copper mineralization are analysed and tracked as there is a
substantial difference in the recovery achieved for each type. Primary sulphide
copper responds well in the flotation circuit, and good recovery and concentrate
grades are generally realized from these minerals. Acid soluble copper represents
secondary copper minerals present in the ore which generally produce lower
recovery results. The recovery factors used in the analysis reflect correlations
between historical recoveries achieved against the various ore types and
proportion of copper mineral species in the mill feed.
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FLOTATION RECOVERY OF GOLD An estimation of gold recovery has been developed based on correlation
studies on historical mill performance versus ore types in the mill feed. The
following table outlines the range of factors used in the analysis.
GRAVITY RECOVERY OF GOLD
A study of historical recovery rates for gold in the gravity concentration
circuit was analysed against different ore types. The study produced no
discernable correlation, and consequently a fixed estimate of 4.5% has been used
in the analysis.
Table 19-5 summarizes the main variables:
TABLE 19-5 MILL OPERATING PARAMETERS Inmet Mining Corporation Mount Fubilan Mine, Papua New Guinea
Ore Type Throughput
t/op.hour Sulphide
Cu Recovery
Oxide Cu
Recovery
Flotation Au
Recovery
Gravity Au
Recovery Siltstone 2,000 77% 41% 53% 4.5%
Monzonite 4,070 94% 49.5% 73% 4.5%
Monsodiorite 3,300 91% 43.1% 73% 4.5%
Endoskarn 3,150 87.5% 42% 63.5% 4.5%
Skarn 3,050 91.8% 45% 66.4% 4.5%
Oxide Skarn 4,340 53% 23% 61.6% 4.5%
Pyrite Skarn 3,780 89% 42% 47.8% 4.5%
KEY PRODUCT CHARACTERISTICS The historical performance of a number of key product parameters and characteristics
has been analysed by OTML for developing the Mount Fubilan Mineral Reserve
estimate. These product parameters reflect the metallurgical response of the various ore
types based on their mineralogical characteristics and the conditions used in the Ok Tedi
mill. The following briefly outlines those parameters and summarizes the performance
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levels projected for each ore type used in the analysis. The parameters include copper
grade in the copper concentrate and fluorine content in the copper concentrate. COPPER GRADE IN COPPER CONCENTRATE Concentrate grade is a key performance parameter that affects the tonnage of
product transported and processed downstream of the mill. Concentrate grade
factors have been developed based on correlation studies of historical production
records. FLUORINE CONTENT IN COPPER CONCENTRATE A penalty for fluorine content in the copper concentrate is levied by smelters
processing the Ok Tedi products. Fluorine occurs in all ore types, but certain
zones are recognized as contributing higher amounts that can result in
concentrates being penalized. Fluorine content that is associated with floatable
minerals can be removed and prevented from contaminating the concentrate by
using the Jameson flotation cell circuit in the mill. The OTML technical services
group have analyzed the relationship between ore type and fluorine content and
have developed a correlation.
SILVER/GOLD RATIO IN COPPER CONCENTRATE While silver is not specifically modeled in the resource as it represents a relatively
minor contributor to economic value, there is a consistent silver value reporting in
the concentrate, generally proportional to the gold content. The correlation
analysis has established a consistent ratio of 2.3 :1 Ag to Au used in the economic
analysis.
Table 19-6 summarizes the main variables:
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TABLE 19-6 KEY PRODUCT CHARACTERISTICS Inmet Mining Corporation Mount Fubilan Mine, Papua New Guinea
Ore Type Cu % in Cu Conc. F ppm in Cu Conc. Ag:Au Ratio Siltstone 24.2% 400 2.3
Monzonite 29.8% 400 2.3
Monsodiorite 28.6 400 2.3
Endoskarn 27.5% 400 2.3
Skarn 28.9% 1600 2.3
Oxide Skarn 24.9% 1750 2.3
Pyrite Skarn 25.1% 1250 2.3
MILL OPERATING COST FORECAST The forecast of process operating costs developed by OTML is the product of a
comprehensive analysis of a number of factors, including the effect of some of the
operational parameters outlined above. The factors analyzed include power cost as a
function of weather patterns, reagent consumptions by rock type, throughput rates by
rock type, etc. The actual expenditures incurred over three years between 2001 and 2003
were used as the basis for assessing costs for elements not directly related to ore types.
This spending rate experience was then applied against the various throughput rates, for
each ore type, to derive expected base unit costs per tonne of mill feed for each ore type.
Material processed at relatively high rates attracts a correspondingly lower cost per tonne
for these basic cost elements. Costs are added to these basic cost elements, associated
with the mineralogical aspects of the ore types such as lime consumption, or Jameson cell
costs for treating fluorine in the ore. All of the various cost factors and elements derived
from this detailed analysis are combined to predict the cost of processing for each ore
types. The unit costs for processing include costs incurred for crushing and conveying
associated with the in-pit crusher.
Table 19-7 summarizes the unit costs forecast for each ore type in the current
The total material mined within the 13D4 pit design as of December 31, 2004 is
estimated to be 557 million tonnes, which includes 307 million tonnes of waste required
to be excavated to recover the ore. The resulting average stripping ratio is 1.2:1.
This reserve is considerably smaller than that indicated to be potentially mineable in
the optimization study outlined above. In that analysis the optimum pit shell mined a
total of 957 million tonnes of material, recovering an estimated 419 million tonnes of ore
containing a total of 3.5 million tonnes of copper. The average stripping ratio of the
optimized shell is 1.3:1. An additional 110 million tonnes of ore would be recovered if
the Phase 2 and Phase 3 designs were implemented as outlined. The remaining ore
materials inside the optimized shell but beyond the Phase 2 and 3 limits include remnant
areas where physical design constraints have limited the design from achieving the
theoretical limits as well as areas where there is geologic uncertainty that negates the
economic value of mining.
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20 OTHER RELEVANT DATA AND INFORMATION
CURRENT MINE OPERATIONS
The current mining operations of Ok Tedi Mining Limited are carried out at the
Mount Fubilan open pit using conventional open pit mining methods and equipment. As
of the end of December 2004, the main mining activities were being carried out on the
1550, 1565, and 1580m benches in the main mining zone. Mining was also active in the
Moscow Ridge and Paris limestone quarry areas located adjacent to and above the south
end Paris waste dump site.
Mining is carried out through a sequence of operations starting with drilling and
blasting the in place rock materials in preparation for excavation using large mining
shovels that load the broken rock materials into conventional mechanical drive mine
haulage trucks with a load carrying capacity of 190 tonnes. The vast majority of the
material mined requires drilling and blasting. A small portion of the excavated material
is moved using bulldozers to push material to the disposal site.
Ore materials are excavated using hydraulic shovels and backhoes and loaded into
haul trucks which then transport the material up and out of the pit via a system of pit
haulage ramps. The ore is delivered to and dumped into one of two crushers where the
material is reduced in size and conveyed to the mill complex for processing.
Waste rock, classified as material that contains copper and gold values below the
cutoff grade, is excavated to expose the mineralized ore. Waste is hauled by truck to a
disposal point beyond the pit limits where it is dumped for permanent disposal. Due to
the steep topography surrounding the Mount Fubilan mine the construction of a
conventional waste dump is not possible. The conditions are such that any significant
accumulation of the material would slide down the slope to lower elevations. Permanent
dumps for accumulation and storage of waste rock materials have not been established.
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At the Mount Fubilan pit, waste rock material is hauled to the south end of the pit
where it is dumped and pushed over the edge of the topography to slide down the slope to
lower elevations. These conditions make the dumping platforms dangerous for personnel
and equipment to operate on; consequently haul trucks dump the waste material at a
stable point (on bedrock), from where bulldozers push the material to, and over, the edge
of the platform. The vigilant monitoring of the dynamic behaviour of the platform
conditions is maintained constantly in order to ensure safe operations. When the platform
behaviour indicates unsafe conditions, dumping operations at the unstable site are
suspended and activity is diverted to other areas.
Surface water management in the pit and the maintenance of groundwater drainage in
the pit slopes are key operational issues. Presently, the highest pit slopes exist on the
west wall where the maximum vertical height is approximately 450 metres. The north
and east pit walls are generally in the range of 250 metres high. The pit is presently open
to the natural topography on the south end, allowing for the natural drainage of in-pit
water and the mine development is being sequenced from south to north with a consistent
gradient to the south to promote drainage. The high rate of rainfall introduces substantial
quantities of surface water into the operation, and pit water management is one of the key
components of the mining system.
CURRENT MINE OPERATING PERFORMANCE
At the present time, the rate of total material movement is primarily limited by the
capacity of the truck fleet. The excavator fleet has surplus capacity beyond what the
truck fleet can provide. RPA reviewed the production performance data for Ok Tedi
reported for the 18 month period from July 2003 through December 2004. In the last six
months of 2003, the mine averaged a daily output of 172,000 tonnes while the twelve
months of 2004 averaged 203,000 tonnes per day. The stripping ratio during these
periods were 1.1:1 and 1.8:1 respectively, indicating that increasing proportions of ore
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reduces the overall capacity to mine material. The ore haul distance and time required to
deliver ore to the crusher are longer that the haul distance and truck cycle time associated
with handling waste.
The average unit mine operating costs per tonne moved were $0.81 during the last
half of 2003 and $0.85 in the year of 2004.
CURRENT MINE EQUIPMENT FLEET
Excavation is primarily carried out using a fleet of four large hydraulic mining
shovels which have a dipper capacity of 28 m3. There are two old Marion M204 cable
shovels in the mine which are used infrequently and are to be decommissioned in the near
future. Where selective mining of ore materials is required, smaller hydraulic excavators
in backhoe configuration are utilized. The primary haulage fleet is made up of twenty
two 190 tonne capacity haul trucks. Additional haulage capacity is available with a small
fleet of 90 tonne capacity trucks. Blasthole drilling is carried out with a fleet of Marion
M3 drills drilling 270 mm diameter holes for loading with explosives. A fleet of various
support equipment is maintained, including dozers for operating the waste dumps and
general clean up and operations support, as well as graders for maintenance of the haul
roads.
Table 20-1 lists the present mine equipment fleet:
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TABLE 20-1 PRIMARY MINE EQUIPMENT LIST Inmet Mining Corporation Mount Fubilan Mine, Papua
New Guinea No. Type Model Capacity 4 Hydraulic Shovel O&K RH200 28 m3 1 Cable Shovel Marion M204 25 m3 1 Hydraulic Shovel Hitachi EX1900 10 m3 2 Hydraulic Backhoe Hitachi EX1800 9.5m3 2 Frontend Loader Caterpillar 992 12 m3
22 Haul Truck Caterpillar 789 190 t 3 Haul Truck Caterpillar 777 90 t 5 Blasthole Drill Marion M3 270 mm 3 Bull Dozer Caterpillar D11 1 Rubber Tired Dozer Caterpillar 2 Grader Caterpillar 24H
The maintenance and office facilities for the mine are located on a wide excavated
flat berm on the east wall of the pit.
KIUNGA OPERATIONS At Kiunga, the concentrate delivered from the overland pipeline is filtered, dried, and
stockpiled for subsequent loading and transport by barge. The dried concentrate is loaded
onto barges and transported more than 800 kilometres down the Fly River to a silo vessel
anchored at the entrance to the Fly River delta or at Port Moresby, depending on weather
conditions. The barges are purpose-built for the shallow water conditions of the Fly
River. The largest vessel has a capacity of 6,200 tonnes. The concentrate barges carry
freight to Kiunga on their return trip. The moored silo vessel, the MV Erawan, stores
concentrate until it is loaded onto export ships that carry it to smelters around the world.
POWER SUPPLY Power for the mine, mill, and township of Tabubil is supplied by hydroelectric and diesel
generators. The Ok Menga hydroelectric run-of-river scheme supplies about 85 per cent
of the project's energy requirements. Maximum power output from Ok Menga is 59
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megawatts. A 45-megawatt diesel power station at Tabubil and a two-megawatt
hydroelectric power station at Yuk Creek meet any additional power requirements. The
hydro power plant capacity varies depending upon weather patterns and accumulated
precipitation. In periods of low rainfall and resulting low river flows, the power
generation requirements are met through diesel generation capacity.
ENVIRONMENTAL IMPACTS OF MINING
Mining at Ok Tedi has caused significantly greater environmental impacts than
projected at the time of mine planning and commissioning in the 1970s and 1980s. Each
year, the mine discharges approximately 60 to 90 million tonnes of waste rock and
tailings to the Ok Tedi river system. This discharge is carried out with the legal approval
of the PNG Government under the terms of the Ninth Supplement to the Ok Tedi Mines
Act. Agreement has been obtained with local affected communities as expressed in the
Community Mine Continuation Agreements signed with some 156 communities. This
encompasses 9 regions along the Ok Tedi and Fly Rivers between the mine and Fly River
Estuary at the Gulf of Papua.
The discharge of rock and sand has filled the Ok Tedi river bed significantly and has
raised the river bed in the upper regions by many metres. Over-bank flooding was
common in areas of flatter river gradients in the lower Ok Tedi, where the river leaves the
foothills of the Star Mountains.
VEGETATION DIEBACK Build-up of mine-derived sediment in the lower Ok Tedi and Fly River has raised the
riverbed resulting in over-bank flooding and sediment deposition on the flood plain. This
inundation stresses, and can kill, flood-sensitive vegetation along the riverbanks and on
the floodplain. OTML monitors the amount and the distribution of resultant “dieback”
through satellite images and ground surveys. Dieback progressively increased as the
amount of sediment in the rivers increased. The total area of vegetation affected by
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flooding in 1992 was 18 km2. It increased to 106 square kilometres by 1995, 478 km2 by
1997, and was mapped at a total of 1,294 km2 in 2002. Modelling projections from the
Mine Waste Management Project expected that the maximum forest dieback would
eventually reach about 2,000 km2 if operations continued unmitigated.
The forest affected by dieback is predicted to slowly recover by natural processes
once the mine closes and release of sediment stops. Vegetation is returning to dieback
areas in the form of wetland grasses and shrubs that are more flood-tolerant than the
original forest plant assemblage. Rapid regeneration of forest has also been recorded
over about 170 km2 as a result of dredging at the Bige operation.
The dieback and other changes in vegetation have affected people living in villages
along and in the vicinity of the rivers. The major impacts include loss of gardens,
reduced supplies of sago palm (a staple food source) and more difficult travel due to
flooding. These people are compensated under a number of compensation arrangements.
ACID ROCK DRAINAGE (ARD) ISSUES OTML has long recognized that ARD issue may be a concern. Currently, water
runoff from the open pit is in the order of pH 3, and the sulphide content of the tailings is
in the order of about 3%. As the mine deepens and materials are extracted with less
buffering capacity, it is expected that the sulphide content of the tailings and waste rock
will increase significantly.
To manage the current ARD potential of the mine waste rock, OTML has calculated
that about 20% limestone needs to be mixed with the waste rock. Although limestone
quarrying has been carried out for this purpose, the ARD problem persists and needs
further consideration.
At present some evidence of ARD has been noted at the Bige dredge repository cells.
Estimated future increases of pyrite content in the ore and, as a result, an increase in the
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tailings sulphide to about 8% suggest that tailing fines to be stored at Bige will have
significant ARD potential. This could result in additional management costs both during
operations and at project closure.
The high sulphide content of the Mount Fubilan ore body means that some potentially
acid-forming mine wastes are generated. This potentially acid-forming material needs to
be managed so that environmental impacts do not occur where acidic water, with
associated high metal content, is released to the environment. To date, small areas of
ARD have been observed on some sandbanks in the lower Ok Tedi during dry periods
when the river level is low. The analysis of river waters indicates no significant impact
on water quality, with alkalinity levels remaining high and copper concentrations within
safe limits.
An extensive ARD monitoring and management program is in place. The active
measures for managing ARD include adding extra limestone to waste rock at the mine to
maintain acid neutralising capacity in the waste rock dumps. OTML is assessing benefits
of preferential dredging of high and low sulphide sediments at Bige to allow better
management of the ARD potential of the dredged sands.
MINE AND MILL IMPROVEMENTS
OTML has been investigating a range of mine and mill improvements to increase
copper and gold recovery and to reduce copper and sulphide minerals released to the river
system. According to OTML, results to date suggest that modifications in the mill could
increase copper and gold recovery by up to five per cent. The studies also show that a
high percentage of the sulphur in mill tailings can be removed in the mill. Alternative
disposal plans for these materials remain to be developed.
OTHER IMPACTS Copper levels in the river system are slightly elevated due to copper in mine rock and
tailings, but are within Australian, PNG and World Health Organization drinking water
standards. Villagers along the river system obtain their drinking water from smaller
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tributaries rather than the main river channels, although water in the main channels is safe
to drink once silt has settled.
Fish numbers have dropped significantly in the Ok Tedi and the Fly River below the
Ok Tedi junction down to the Strickland River junction. OTML believes this is due to
sediment smothering fish habitat in the main river channels. Fish numbers and variety in
the Fly River flood plain and off-river water bodies are said to be unaffected by the mine-
derived sediment. OTML states that independent studies have shown that mine sediment
in the Fly River catchment has not affected the Torres Strait or the Great Barrier Reef.
Detailed and numerous environmental, health, and engineering studies have been
undertaken to investigate the impacts of mining. Some of the studies are available on the
mine’s web site.
MINE WASTE MANAGEMENT BACKGROUND AND ISSUES
The management of mine rock waste, including waste rock from the pit and tailings
from the mill, is a significant challenge. OTML has undertaken numerous studies to
assess management options. The original Ok Tedi project design included a large tailings
dam on the Ok Ma. The foundations were destroyed by a landslide in 1984 and the dam
was never built. A small volume of tailings was retained in the Interim Tailings Scheme
near the mill in the early years of gold operations. Since that time, tailings have been
discharged directly into the Ok Tedi River system. In the early 1990s, large areas of
stressed vegetation and vegetation dieback became evident along the Ok Tedi and Upper
Fly systems, caused by increased flooding due to the build-up of mine-derived sediment
in the bed of the river.
RESEARCH INTO MINE WASTE MANAGEMENT
In 1996, OTML set up the Mine Waste Management Project (MWMP). This project
brought together international experts from a wide range of disciplines to undertake an
extensive two-year study of the engineering, environmental, social and risk components
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involved in mitigating the environmental impacts of the mine waste. The MWMP also
included a two-year, US$60 million dredging trial in the lower Ok Tedi to investigate the
effectiveness of dredging as a measure to reduce sediment build up in the river system.
After reviewing a large number of mine waste management possibilities, four
possible options were examined in detail in the MWMP to deal with mine waste issues at
Ok Tedi:
• continue the current dredging trial in the lower Ok Tedi,
• dredge and pipe mine tailings to a storage area on land,
• do neither, or
• close the mine early.
The MWMP comprised a comprehensive risk assessment integrating information
from all environmental, health, engineering, social and economic studies. A large
component of the overall risk assessment, the Human Health and Ecological Risk
Assessment (HERA), was overseen by a group of five senior independent scientists from
around the world. This Peer Review Group provided advice, recommendations and the
peer review of all studies relating to the HERA.
The final Mine Waste Management Project Risk Assessment was completed and
provided to the PNG government in August 1999. The risk assessment concluded that
the environmental effects, particularly the over-bank flooding and vegetation dieback,
were likely to expand significantly and that none of the options examined offered a clear
solution to the environmental and social impacts of the mine operations.
WORLD BANK REVIEW
The government requested its own consultants and the World Bank to review the Risk
Assessment and set up a task force to advise the government on its response to these
findings. In January 2000, the World Bank reported that “from a purely environmental
perspective, the risk assessment suggests that the Ok Tedi mine needs to be moving
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towards closure as soon as possible”, but that “immediate closure would appear to carry
with it the worst social impact”.
PUBLIC CONSULTATION
The government and OTML undertook an extensive consultation process with local
people to inform them of the environmental predictions and to give them the opportunity
to express their views on the future of the mine. Through this process, the communities
within the region affected by the mine, which include about 50,000 people, endorsed the
continued operation of the mine until planned closure. This community endorsement has
been formalised through a series of Community Mine Continuation Agreements
(CMCAs). DREDGING AT BIGE
Following the scheduled completion of the Ok Tedi dredging trial at Bige in March
2000, the PNG Government requested that dredging continue on a permanent basis. To
date, almost 85 million tonnes of sand and gravel have been removed from the river and
significant recovery of dieback-affected forest has been documented.
SOCIAL COMMITMENTS AND IMPLEMENTATION At the village and regional levels, implementation plans have been put in place to
meet various program commitments. There are a wide range of concerns and opinions
among the local population regarding these plans.
To address these concerns OTML has:
• targeted that each village should be visited at least once a month, • developed a communications plan including Trust Meetings, Village Planning
Committee Meetings,
• combined OTML/VPC/Local Trustee Meetings,
• installed VHF radios in many of the villages and now can communicate with them much easier than before.
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Over a longer term, social and political issues will remain over how the dividends
flowing from the PNG Sustainable Development Program and the Ok Tedi Development
Foundation will be managed and used for local sustainable benefits. One third of the
annual distribution goes to the western region and two thirds go to the whole country in
40 year long-term trust fund.
CLOSURE REQUIREMENTS PROCESS
A conceptual Rehabilitation and Closure Plan was prepared by OTML following the
process of consultation in March 1998. Subsequent workshops and meetings with OTML
specialists led to the submission in November 2000 along with a companion report titled
“Social and Sustainable Development Issues in Relation to Mine Closure” in recognition
that social issues are a dominant consideration in relation to mine closure. The State
subsequently accepted the Plan and OTML produced the “2002 Draft Mine Closure Plan”
which was approved by the Minister for Mining in August 2003 and by the Minister for
Environment and Conservation in May 2004. The 2000 and 2002 draft Mine Closure
Plans and the comments received following the submission of those plans have been used
by the OTML Internal Mine Closure Planning Committee (IMCPC) as the basis for
community consultation and subsequent preparation of the draft mine closure plan.
MINE CLOSURE OBJECTIVES
The Mine Closure Code provides the guidance framework for the closure plan
including definitions and closure plan commitments/actions, financial assurance and
inspections. Schedule 1 of the code provides content guidance for all areas other than the
Mine Area Rehabilitation Plan, which is covered by Schedule 2. The Mine Closure Plan
provides the basis of proposed reclamation actions and assumptions associated with the
mine and mill site areas. The objective of the mine closure planning process is to
develop a mine closure plan that will:
• provide for orderly relinquishment of leases by satisfying the requirements of
the Mining (Ok Tedi Agreement) Act 1976;
• comply with the Mine Closure Code;
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• satisfy the requirements of other relevant applicable PNG Legislation, e.g.
Mine Safety Act, Chapter 195A;
• ensure facilities, plants, and materials are decommissioned and disposed of in
a safe manner which minimises adverse effects on the environment;
• minimize potential for any post-closure liability;
• satisfy the requirements of the owners/shareholders;
• obtain stakeholder acceptance of closure proposals;
• utilize, where feasible, low maintenance structures and facilities; and
• leave formerly leased land in a condition suitable for the agreed land use.
FINANCIAL ASSURANCE
The first estimate of closure cost for the project was in the order of $150 million.
However, more recent estimates by OTML and its consultants suggested $91 million.
RPA understands that at the time of the visit the PNG government has accepted a closure
cost estimate at $100 million as the basis for the Financial Assurance requirements. This
money is to be set aside in a reserve account, known as the Ok Tedi Financial Assurance
Fund (FAF), held jointly by the state and OTML. The FAF is to receive biannual
contributions with the first contribution to be made on or before 1 July 2002. Actual
contributions have been as follows:
• July 2002 $7,550,000
• January 2003 $7,550,000
• July 2003 $7,550,000
• January 2004 $4,636,344
• July 2004 $4,622,000
• January 2005 $ 4,199.329
• Total to date $36,057,664
RPA reviewed the closure cost estimates and noted that the closure costs for Bige
were estimated at less than US$700,000 providing costs for establishing vegetation on
200 ha of dredge cells. These costs do not reflect the potential need for cover placement
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over the tailings sediment if such measures are needed to mitigate ARD. If covers are
required, the costs could be in the order of US$70,000 per ha. If this requirement were
developed, there could be a significant additional liability. RPA estimates that it could
range between US$40 million US$80 million.
COMPLIANCE FORMAL PNG REPORTING
The following information was extracted from the OTML 2004 annual report with
respect to the monitoring of compliance within the framework of the new regulatory
regime.
COMPLIANCE MONITORS
• There were no human health issues regarding water quality in terms of drinking standards. On each of the monthly sampling occasions, none of the water quality parameters exceeded drinking water guidelines.
• While variation in fish biomass was recorded, it was not statistically
significant and there were no issues relating to the edibility of any fish. However, biomass declines continue at Ogwa – this is thought to be attributable to the commercial fishing pressures at Obo. The edibility criteria will be refined in line with results from the current Community Health Survey.
• Floodplain food crops presented no challenges regarding edibility although
the method through which this is determined continues to require further attention. This is being actively addressed through the work being undertaken as part of a Community Health Survey.
• The main channels of the Ok Tedi and Fly River were navigable for most of
the reporting period and any hindrance during FY05 would be climatically influenced rather than mine related. At the time of writing this report (August – September 2004) El Nino-like conditions are resulting in low river levels which are having a marked influence on river navigability.
• Dissolved copper levels throughout the system were consistent with historical
trends and patterns of occurrence. Labile copper analyses continue to require ongoing datasets before any determination can be made relating to any trends
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or patterns of occurrence. However, it appears that a relationship between pore water alkalinity and river chemistry is becoming established.
• Ecotoxicological monitoring analyses continue to require ongoing datasets
before any determination can be made relating to any trends or patterns of occurrence.
• Vegetation dieback mapping revealed a slight 2% increase in the area
affected by dieback but a 33% increase in the area under some form of recovery. This reflects a continuation of the drier climatic conditions also experienced during FY03 resulting in a slowing of dieback extension. However, this pattern can be readily reversed with the onset of wetter than normal conditions.
• There was no evidence of ARD related adverse changes to riverine chemistry
downstream of the mine. However, while as yet not evident, further work is required to examine oxidation of mine-derived minerals and any measurable increase in metal bioavailability or impact on the ecology of the river system that may result.
ENVIRONMENTAL VALUES
Each of the values was monitored during FY04. None of them was detrimentally
impacted, compared to existing status in December 2001, as a result of the mining
operation. Specifically
• Water quality within the main river channels was well within the stipulated drinking water guidelines.
• There was no statistically significant reduction in fish biomass at the
monitoring sites. • There were no instances of fish tissue metal levels presenting any human
health concerns. • Floodplain availability was not further impacted during FY04.
• As they are grown in flood free areas, no challenges were found regarding the
edibility of food crops.
• The main river channels were generally navigable. Any impact during FY05 will be related to climatic factors rather than mine-derived impacts.
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REGIME PROGRAMS The Regime currently comprises four programs, viz, the ARD Management Program,
the Riverine Aquatic Ecology Management Program, the Riverine Terrestrial Ecology
Management Program and the Industrial Sites Management Program. The status of each
of these programs is presented and a discussion of future direction identifies specific
activities to be undertaken during FY05. These activities are summarized in Schedule II
which is appended to this report as Appendix 1.
MITIGATION OPTIONS
Current mitigation options are limited to those related to the ARD program. Specific
options are currently in place addressing the buffering capacity contained within the
waste rock disposal areas and the stockpiled sands at the Bige dredge site. Further
development of these options is to be investigated during FY05.
INTERNAL MANAGEMENT OTML has engaged the services of external consultants to carry out independent third
party environmental performance audits. These audits have been used to confirm
environmental compliance, compare existing practices to best practices, identify
environmental performance issues, and to develop remedial action plans to address
concerns that become apparent. The audits focus primarily on the industrial aspects of
the operation and exclude issues related to social aspects, riverine impacts, and
environmental monitoring data. Key audit findings have been identified that can assist
OTML improve its environmental performance including waste management, secondary
containment, oily water separation, landfill disposal and management, and day to day site
management of environmental risks.
CONCLUSIONS The sound management and minimization of environmental impacts associated with
operations at the Ok Tedi mine are significant and ongoing challenges. Failure to achieve
the initially proposed designs for containment of mill tailings and waste rock, coupled
with the continuous erosion of mine site materials during the life of operation, has
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resulted in a legacy of large scale sediment deposition and resultant flooding, dieback,
and changes in the river system and its use by humans along the length of the Ok Tedi
and Fly River before its confluence with the Strickland.
These impacts have been significant and have resulted in extensive concern by local
and regional groups, as well as by the government of PNG and international
environmental NGOs. To address these concerns, OTML initiated a far reaching Mine
Waste Management Program (MWMP) initiative that included extensive research and
scientific studies with respect to the areas of concern, as well an in-field large scale test
of river dredging to reduce impacts of sedimentation and consequent flooding and
changes in river use.
In acknowledgement of the MWMP’s conclusions that little could be done to
minimize existing impacts so long as the mine operated, OTML and the government of
PNG consulted with the local and regional communities to see if the mine should be
closed or continue operations. Based on the positive feedback from the communities
with respect to the benefits received especially in health and education services, OTML
developed a framework for continued operations. This framework included research and
development initiatives for areas of concern with the objective of minimizing mine
related impacts. Furthermore, OTML committed to a new environmental regime to
monitor the ongoing impacts of operations and mine discharges within the context of the
agreed to environmental values. OTML recognizes the impact of the past and current
practices. It has committed to compensation for past impacts and has provided a
framework for community development during operation and at closure.
OTML has made commitments to mine closure via its accepted closure code and draft
closure plans in addition to operating commitments. The code and plans provide the
framework, assumptions, and proposed actions for decommissioning facilities at the
mine, in and around Tabubil, at Kiunga and in other offsite areas and systems. The draft
closure plan is to be updated every two years and the final plan must be submitted no
later than four years before final closure. Closure funds are being set aside within a
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Financial Assurance Fund on a biannual basis, with contributions to date exceeding
US$36 million of a required US$100 million. It was noted that this estimate only
includes minimal costs associated with the closure of the Bige dredge cells. It is RPA’s
opinion that closure liabilities at Bige may be significantly increased if the cells require
construction of engineered covers to minimize acid rock drainage, or if post closure water
management is necessary.
The social benefits associated with the mine have been enormous, contrary to the
environmental impacts of the operation on the regions. In addition to its role as a major
employer and wealth generator for employees, the mine has been a significant contributor
to the development and operation of regional infrastructure, including housing, roads, and
communications. Most importantly, the education and hospital and health care systems
have benefited considerably.
The environmental challenges have resulted in:
• An operational framework and community agreements
• Unique ownership status and commitments to the community and the region
• Impact offset compensation
• Operational and long-term development investment agreements
All these contribute to providing far reaching and significant contributions to the
long-term sustainability for the peoples of the region.
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PROJECT ECONOMICS
RPA has developed a project development scenario based on the December 2004
Mineral Reserves as outlined above. The production schedule is based on the Mineral
Reserves and the mining schedule developed by OTML. The capital and operating cost
forecasts presented are based on the estimates and factors outlined below.
CAPITAL COSTS
Capital costs have been provided for in the life of mine plan based on the estimates
presented by OTML in the capital cost analysis section of the 2004 Reserve Support
Document. The capital costs include a number of replacement equipment items and
ongoing support items for the mine. In addition, some one-time capital projects are
provided for including the relocation of the Taranaki crusher and conveyor system, and
the implementation of a pit dewatering system. In the mill area, the capital estimate
provides for specific upgrades and replacement items in addition to the cost estimate for
implementation of a new process control system and projects such as flotation
optimization. Capital items for Bige include additional power generation capacity and
general equipment replacement allowances. Capital provisions for general and
administrative areas have also been included.
In addition to the cost estimates presented by OTML, RPA has included provisions
for site closure costs in the last year of the mine life. This allowance includes $50 million
for the mine area, $50 million for the mill site, and $50 million for the closure of the Bige
tailings site. These estimates are only rough allowances based on closure cost estimates
developed to date. Table 20-2 summarizes the life of mine capital cost forecast:
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TABLE 20-2 LIFE OF MINE CAPITAL COST BY AREA Inmet Mining Corporation Mount Fubilan Mine, Papua New
Guinea
Area Cost Mine $87,155,000
Mill/ Kiunga $53,465,000
Bige $50,800,000
Power & Engineering $22,080,000
Planning & Tech. Services $1,088,000
Business Support $5,600,000
Public & Community Affairs $4,000,000
Commercial $4,000,000
Closure $15,000,000
Total Capital $243,188,000
OPERATING COSTS MINING
Mine operating costs have been estimated based on the forecasts and factors
presented by OTML in their 2004 Reserve Support Document. Various mining cost
factors have been developed to provide for differences expected in various rock types as
well as the impact of longer haul distances that will be incurred as the pit deepens. Unit
mining costs have been derived for each year of the operation over the remaining mine
life based on the productivity and performance estimates developed by OTML. Unit
mining costs are projected to run at $0.75 per tonne mined in 2005, climbing to the
highest level of $1.10 per tonne in the last year of operation in 2013. Mining costs are
forecast to average $0.82 per tonne over the nine years’ remaining mine life.
PROCESSING Mill operating costs have also been estimated based on the forecasts developed by
OTML in their 2004 Reserve Support Document. Unit milling costs have been
developed for each of the primary ore types to reflect their individual throughput rates
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and reagent consumption factors. The costs are forecast to vary over a fairly narrow
range between a low of $1.78 and a high of $1.82 with the average over the nine year life
at $1.80 per tonne processed.
OPERATIONS SUPPORT Operating costs associated with various support functions have similarly been
estimated based on information presented in the 2004 Reserve Support Document as well
as the OTML 2005 – 3 Year Business Plan. Concentrate handling costs have been
forecast based on current experience and are based on an average unit cost of $55.52 per
tonne of concentrate throughput. These handling costs provide for operation of the
overland pipeline, dewatering and handling facilities at Kiunga, and the barging and final
re-handling onto export vessels at tide water. Dredging costs have been forecast as a
fixed annual cost of $30.4 million and cover the dredging of river sediments and stacking
and maintaining the tailings stockpiles.
The technical and management costs associated with the planning and technical
services group for the mine and mill are forecast as a fixed annual cost of $7.8 million.
Engineering and Power costs are provided for the general costs associated with operating
and maintaining the general peripheral infrastructure, including the transportation and
power systems, the town site, and other operating areas. The cost of diesel power
generation is provided for in this item as well. It is forecast as a fixed annual cost of
$19.3 million. Finally the Environment cost associated with the ongoing monitoring and
management of the environmental impact around the general sites is provided for at a rate
of $2.5 million per annum.
COMMERCIAL GROUP COSTS The commercial group cost provides for costs associated with various departments
involved in managing and maintaining OTML’s business activities. The commercial
group includes logistics, accounting, information services, marketing, and senior
management. An annual operating cost estimate of $48.0 million covers the logistics
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operations, including the personnel transportation flight operations, freight operations,
and procurement. Accounting department and information services costs have been
estimated at a rate of $13.0 million per year, and senior management costs at $3.2
million. In total the commercial group is forecast to incur $64.2 million per year.
COMMUNITY AND BUSINESS SUPPORT The community and business support group includes the human resources department
and provides security, infrastructure support, and community services and support. In
total this area is forecast to cost $42.5 million per annum.
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CONTRACTS
There are a number of contracts that OTML uses in managing and maintaining the
overall operation. On the whole, these contracts make up a relatively small part of the
overall OTML operations and individually do not represent key integral parts of the Ok
Tedi operation. The primary mine excavators are operated under the terms of an
operating contract with Starwest Constructions Pty Ltd. (“Starwest”). The contract has
been in effect since August 1998 for a period of seven years. Under the terms of the
contract, Starwest supplies and operates hydraulic excavators and provides supervisory,
operations and maintenance personnel, equipment, and supplies as required, to meet a
minimum guarantee on productivity performance. The contractor excavates ore and
waste materials and loads these materials into OTML operated haulage trucks. The
contractor is paid for services based on an hourly rate for equipment time. OTML report
that the contractor is operating satisfactorily and that they enjoy a good working
relationship.
TAXES AND ROYALTIES
A 2% net smelter return royalty is paid to the PNG government on all metal
production from the Ok Tedi mine. This royalty is calculated based on the net revenue
realized after deducting smelting, refining, transportation, and selling costs associated
with the metal sales.
CASH FLOW
Table 20-3 summarizes the operating parameters forecast for the remainder of the
mine life, including production quantities, revenues, costs, and net cash flow.
2005 2006 2007 2008 2009 2010 2011 2012 2013 Total
RPA developed a sensitivity analysis that tested the impact of changing certain key
assumptions and factors on the base case cash flow in Table 20-3. The factors tested
included head grade forecast, capital cost estimate, operating cost factors, and metal
prices. The results of each of these sensitivities are illustrated in Figures 20-1 and 20-2.
The results indicate that the net present value of the project cash flow estimate is most
sensitive to metal prices, with the project being least sensitive to the capital cost
assumptions.
FIGURE 20-1 OK TEDI NPV SENSITIVITY ANALYSIS
Ok Tedi Cash Flow SensitivityBased on $0.90 Cu & $360 Au
($0.2)
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
-30% -20% -10% 0% 10% 20% 30%
Bill
ions
Percentage Change
Cas
hflo
w 1
5% N
PV
Price Grade Capital Operating Source: RPA
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FIGURE 20-2 OK TEDI SENSITIVITY ANALYSIS
Ok Tedi Sensitivity SummaryCash Flow Sensitivity to +/- 30% Change on Key Factors
($0.2)
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
Price Operating Cost Grade Capital Cost
Bill
ions
Key Factors
15%
NPV
Cas
h Fl
ow V
alue
+/- 10% Sensitivity
+/- 30% Sensitivity
Source: RPA
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21 INTERPRETATION AND CONCLUSIONS MINERAL RESOURCE ESTIMATE
OTML has produced a very thorough and well-organized report that describes all of
the technical details related to the December 2004 Mineral Resource estimate. In RPA’s
opinion, OTML has done an excellent job in documenting its 2004 resource estimation
procedures and results.
As of December 2004, OTML estimated the Measured and Indicated, and Inferred
Mineral Resources of the Mount Fubilan. In RPA’s opinion, the December 2004 Mineral
Resource estimate is reasonable and acceptable to support the Mineral Reserve estimate.
The Mineral Resources have been calculated to an elevation of 1,153 m. It is RPA’s
view that a portion of the resources do not have reasonable prospects for economic
extraction even at significantly higher metal price assumptions. Based on an economic
assessment using higher revenue value assumptions (Base Case prices x 1.4 factor,
approximately $1.25 Cu, $490 Au) RPA believes that the portion of the model that can be
suitably classified as meeting the requirements of a Measured and Indicated Mineral
Resource under NI 43-101 guidelines would be 543 million tonnes averaging 0.77%
copper and 0.9 grams per tonne gold.
It is RPA’s opinion that the estimate of Measured skarn and endoskarn resources
should be re-classified as Indicated.
Drill hole data and wireframe models were not updated for the 2004 resource
estimate. RPA concludes that this mostly affects reliability of the deeper resources
situated well below the current ultimate pit design called “13D4”.
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OTML is drilling more holes to evaluate the open pit and underground potential of
the skarn mineralization located below the ultimate pit design.
MINERAL RESERVE ESTIMATE
The ultimate pit design used to determine the estimate of Mineral Reserves is well
inside the potential economic limits developed in the optimization study.
RPA concludes that some of the operating cost and performance parameters that have
been used in the economic optimization work are based on an assumption of performance
and cost improvements compared to current experience. At present, RPA regards some
of the forecast productivity factors to be optimistic but recognizes that OTML has
initiatives in place to reduce haulage costs and to increase mill productivity. These are
key factors underlying OTML’s life of mine cost estimates.
RPA concludes that ongoing geotechnical assessments of the pit slope stability and
implementation and monitoring of the depressurization program are key requirements to
achieving the ultimate pit limits and recovery of the Mineral Reserves.
On the basis of the detailed and extensive analysis, and methods applied by OTML,
RPA concludes that the Mineral Reserves as estimated based on the 13D4 pit design
represent Proven and Probable Mineral Reserves consistent with the definitions set out in
NI 43-101 and defined by the CIM Standards on Mineral Resources and Reserves
Definitions and Guidelines adopted by the CIM Council on August 20, 2000.
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22 RECOMMENDATIONS MINERAL RESOURCE
RPA has not identified any significant problems with the OTML resource estimation
methodology and RPA’s resource related recommendations should be considered as
opportunities for future refinements. RPA notes that some of RPA’s recommendations
already exist in past reports by OTML and SRK and that OTML could not implement
these refinements for the 2004 resource estimate because of the time limitations. RPA
recommends the following:
DRILL HOLE DATABASE RECOMMENDATIONS 1. Continue to verify approximately 5% of the drill holes every year and retain a
digital record that lists all of the records that were checked and any corrections that were made.
2. Clean up the lithology data.
3. Correct some of the dates in the collar table.
QA/QC AND SAMPLING RECOMMENDATIONS 1. Review the QA/QC procedures, and the geology department should designate
someone to be responsible for compiling and monitoring all of the QC data, including the OTML Laboratory reference standard and replicate results.
2. Reduce the geology reference standard insertion rate from one every ten
samples to one or two per diamond drill hole or approximately one in every fifty blast hole samples.
3. Insert barren split core or other suitable barren material as blanks into the
sample stream at a rate of one or two per drill hole or one in every fifty blast hole samples.
4. Insert occasional drill core or blasthole duplicates.
5. Compile the historical laboratory and geology reference standard results to
confirm that no major analytical biases existed.
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6. Send several hundred pulps to an outside accredited laboratory and consider sending pulps out on a routine basis.
7. Compile the historical laboratory replicate data.
8. Investigate the apparent high bias associated with the blast hole data.
RESOURCE ESTIMATION RECOMMENDATIONS 1. Complete the new wireframe models. 2. Investigate including the blast hole data. 3. Review the composite length strategy and consider using shorter length
composites, particularly for the skarn mineralization which has more variable grades and geometries.
4. Investigate whether different cutting levels should be applied to the drill holes
and blast holes. RPA’s preference is to cut high resource assays before compositing.
5. Review the threshold grades and restricted search radii once the new
wireframes are completed.
6. Generate more density data for the skarns and endoskarn mineralization.
7. Investigate interpolating the block model density values, particularly for the skarn mineralization.
8. Carry out new directional variography studies.
9. Use ordinary kriging in the future.
10. Reduce some of the longer search radii to approximately two times the
variography ranges of continuity.
11. Build a partial block model with 25 m by 25 m by 15 m high blocks. This would allow each lithology to be properly represented by its proportion in the block.
12. Investigate developing a system to reconcile by rock type.
13. Construct scatter plots that show assays and block grades by elevation, by
easting, and by northing for each rock type as a further check on the local block model grade estimates.
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14. Modify the classification methodology so that it is more compatible with the closer spaced drilling required to define skarn and endoskarn resources.
15. Use a high metal price optimization pit shell to constrain future resource
estimates at depth.
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23 SOURCES OF INFORMATION Agoratek International, 2003, Ok Tedi Mining Limited Audit of Sampling Procedures
and Equipment, Internal Report by Francois-Bongarcon Dated October, 2003. Bamford, W.R., 1972, The Mount Fubilan (Ok Tedi) Porphyry Copper Deposit, Territory
of Papua and New Guinea: Economic Geology, v. 67, p. 1019-1033. Cox, D.P., and Singer, D.A., 1992, Distribution of gold in porphyry copper deposits, in
DeYoung, J.H., and Hammerstrom, J.M. eds., Contributions to commodity research: U.S. Geological Survey Bulletin 1877, p. C1-C14.
Einaudi, M.T., Meinert, L.D., and Newberry, R.J., 1981, Skarn deposits, in Skinner, B.J.,
ed., Economic Geology 75th Anniversary Volume: El Paso, Texas, Economic Geology Publishing Co., p. 317-391.
Howell, W.J.S., Fardon, R.S.H., Carter, R.J., and Bumstead, E.D., 1978, History of the
Ok Tedi Porphyry Copper Prospect, Papua New Guinea, Economic Geology Vol. 73, p. 796-809.
Mining Journal Special Publication, 2004, Papua New Guinea, February 2004. OTML, 2005, Support Document for the Reserve Statement as at 31st July 2004 & 31st
December 2004, A document for OTML internal use detailing Ore Reserves by A. Sharp Dated March 5, 2005.
OTML, 2005, Exploration License 581 and SML1 Ok Tedi Annual Exploration Report
for Period Ending November 3, 2004, by J. Kepa, R. Sumaiang, and B.L. Jainona, Internal report Dated January 2005.
OTML, 2004, Resource Estimation Report for F405 Model, Internal Report by A. Sharp
and M. Humphreys Dated September 27, 2004. OTML, 2003, Prove Check of Drill Hole Data in Oracle Database, Internal Memorandum
by A. Sino Dated May 22, 2003. OTML, 2002, CY-03 Mineral Resource and Ore Reserve Report as at 31 December 2002,
Internal Report by D.T. Brost Dated December 2002. OTML, 2002, Untitled Internal Report on Density Data Dated March 2002. OTML, 2001, Ok Tedi Rock/Ore Types Moisture Content and Dry Density
Determination, Internal Memorandum by John Ninduara Dated May 12, 2001.
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OTML, 2001, Annual Review 2001, OTML Report to Shareholders. Rogerson, R., and McKee, C., 1990, Geology, volcanism and mineral deposits of Papua
New Guinea, in Hughes, F.E., ed., Geology of the mineral deposits of Australia and Papua New Guinea: Melbourne, Australasian Institute of Mining and Metallurgy Monograph 14, p. 1689-1701.
Rush, P.M., and Seegers, H.J., 1990, Ok Tedi copper-gold deposits, in Hughes, F.E., ed.,
Geology of the mineral deposits of Australia and Papua New Guinea: Melbourne, Australasian Institute of Mining and Metallurgy Monograph 14, p. 1747-1754.
Sillitoe, R.H., 1989, Gold deposits in western Pacific island arcs: the magmatic
connection, in Keays, R.R., Ramsay, W.R.H., and Groves, D.I., eds., The geology of gold deposits: the perspective in 1988: Economic Geology Monograph 6, p. 274-291.
SRK Consulting, 2004a, Review of the July 2004 Resource Model and Related Practices
for the Mount Fubilan Operations, SRK Project OKT402, Internal Report by A. Wesson for OTML, July 2004.
SRK Consulting, 2004b, Ok Tedi Mining Limited Audit of Mineral Resources as at 31
July 2003 and Ore Reserve Estimate as at 31 December 2003, SRK Project OK301, Internal Report by A. Wesson and J. MacIsaac Dated January 2004.
CMCA 2004, CMCA Environmental Predictions Community Patrols – April-June. Ok Tedi Development Foundation 2001, Investing in the Future of Western Province,
November 2001. OTML, 2005, OTML Mine Closure Planning January 2005, Presentation Prepared by
Ani Topurua, OTML Tabubil, January 2005. OTML, 2005, Mine Area Creeks: Recent Findings, Presentation, February 2005. OTML, 2005, Provincial Health Services in Western Province/Telefomin District,
Presentation, 2005 Health Implementation Plan. OTML, 2005, Riverine Management Programs, Environment Department Ok Tedi
Mining Limited, March 2005. OTML, 2005, ARD Management Program: A Status Report, Presentation Prepared by
Henry Kundapen, Riverine Management, Environment Department, March 2005.
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OTML, 2004, Annual Environmental Audit 2003, Final Report, January 2004. OTML, 2004, Annual Environmental Audit 2004, Draft Report, January 2004. OTML, 2004, Annual Environmental Report, FY04, Report ENV040920 Environment
Department, September 2004. OTML, 2004, Draft Mine Closure Plan, Part 1 – Decommissioning and Infrastructure
Plan, December 2004. OTML, 2004, Draft Mine Closure Plan, Part 2 – Social and Economic Impact Repor,.
December 2004. OTML, 2004, Draft Mine Closure Plan, Part 3 – Mine Area Rehabilitation Plan.
December 2004. OTML, 2004, Environment Presentation, Environment Department Ok Tedi Mining
Limited, May 2004. OTML, 2004, OTML Mine Closure Update December 2004, Part 1 – Decommissioning
and Infrastructure Plan, Presentation to the State February 2005. OTML, 2004, Past, Present and Future, 8th PNG Mining and Petroleum Investment
Conference, Sydney, December 2004. OTML, 2004, Personal Correspondence to David Gwyther re: OTML Riverine Review,
May 2004. OTML, 2004, Environment Presentation, Environment Department, May 2004. OTML, 2004, Patrol Report Presentation, November 2004. OTML, 2004, Social and Economic Impact Report, 2004 Draft Mine Closure Plan,
Presentation to the State February 2005. OTML, 2003, Environmental Action Plan 2002-2003, Actions Developed from Findings
of HLA-Envirosciences FY02 Audit Report, 14 January 2003, Report No. ENV 03 01 10.
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OTML, 2001, Community Mine Continuation Agreement Between Middle Fly Communities and Ok Tedi Mining Limited, December 6, 2001.
OTML, 2001, Community Mine Continuation Agreement Between Lower Ok Tedi
Communities and Ok Tedi Mining Limited, November 28, 2001. OTML, 2001, Interim Tailings Storage Area Conceptual Closure Plan, Final Report, PM
6762 34, June 2001. OTML, 2001, OK Tedi Mine Closure and Decommissioning Code 2001. OTML, 2001, Independent State of Papua New Guinea, No. 7 of 2001, AN ACT entitled
Department, September 2003. OTML, 2003, Environment Standards External Audit, April 30 – May 7, 2003, June
2003. OTML, 2003, Mine Closure Cost Review, Prepared by Ken Voigt, November 2003. OTML, 2003, OTML’s Response to the NSR Riverine Review, October 2003. OTML, 2003, Review of Compliance with the Environmental Regime and the Science of
OTML’s Monitoring Activities and Other Work Assessing the Effects of its Operations on the Downriver Environment, CR 1065_1_v4, October 2003.
OTML, Regional Development – Project Delivery Issues. OTML, Regional Development Strategies. OTML, 2004, OTML Welcomes you all to this Important Provincial Immunisation and
Fly River Community Healthy Services Program Planning Workshop, Presentation, August 2004.
Parametrix, Inc. and URS Greiner Woodward Clyde, 1999, Assessment of Human Health
and Ecological Risks for Proposed Mine Waste Mitigation Options at the Ok Tedi Mine, Papua New Guinea, Detailed Level Risk Assessment, Final Report, Prepared for Ok Tedi Mining Limited, November 1999.
Parametrix, Inc. and URS Greiner Woodward Clyde, 1999, Assessment of Human Health
and Ecological Risks for Proposed Mine Waste Mitigation Options at the Ok Tedi Mine, Papua New Guinea, Screening Level Risk Assessment, Final Report, Prepared for Ok Tedi Mining Limited, November 1999.
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24 SIGNATURE PAGE This report titled “Technical Report on the Ok Tedi Mining Limited Mount Fubilan
Mine Mineral Resource and Mineral Reserve Estimates, Papua New Guinea, Prepared for
Inmet Mining Corporation” and dated August 2, 2005 was prepared and signed by the
following authors:
(Signed and Sealed) Dated at Toronto, Ontario James W. Hendry, P. Eng. August 2, 2005 ROSCOE POSTLE ASSOCIATES INC. Principal Mining Engineer
(Signed and Sealed) Dated at Toronto, Ontario Luke Evans, M.Sc., P.Eng. August 2, 2005 ROSCOE POSTLE ASSOCIATES INC. Consulting Geological Engineer
(Signed and Sealed)
Dated at Toronto, Ontario Gerd Wiatzka, P.Eng. August 2, 2005 SENES Consultants Limited Principal, Manager Mining
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25 CERTIFICATES AND QUALIFICATIONS JAMES W. HENDRY
As an author of this report entitled “Technical Report on the Ok Tedi Mining Limited Mount Fubilan Mine Mineral Resource and Mineral Reserve Estimates, Papua New Guinea, Prepared for Inmet Mining Corporation” and dated August 2, 2005 (the Report) and on behalf of Inmet Mining Corporation (Inmet), I hereby make the following statements:
A. My name is James W. Hendry and I am Principal Mining Engineer with Roscoe Postle Associates Inc. My office address is 55 University Avenue, Suite 501, Toronto, Ontario M5J 2H7.
B. I have received the following degree in Mining Engineering:
• B.Sc. in Mining Engineering, Queen’s University, Kingston, Ontario.
C. I am registered as a Professional Engineer in the Province of Ontario. I am also a Member of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM).
D. I am a Qualified Person for the purposes of National Instrument 43-101. E. My contributions to the Report are based on my personal review of technical
reports provided by the Ok Tedi Mining Limited (OTML) and Inmet, on discussions with OTML and Inmet representatives, and on information available in public files. My relevant experience for the purpose of the Technical Report is:
• Mining engineering experience in mining industry since 1976 including
development of numerous open pit mine designs, feasibility studies, and operations reviews.
• Mining operations experience ranging from operations supervisor through senior executive responsible for overall operating performance.
• Reviews and evaluations of numerous open pit mines in Canada, the United States, Latin America, Russia, Europe, and Africa.
• Extensive experience with computerized modeling and optimization of open pit mines.
F. I have been practising as a professional mining engineer for over 25 years. G. I visited the Mount Fubilan Mine from March 7 to 11, 2005. H. I am responsible for the Mineral Reserve related parts of the Report:
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I. I am not aware of any material fact or material change with respect to the subject matter of the Technical Report that is not reflected in the Technical Report, the omission to disclose which makes the Technical Report misleading.
J. I am independent of Inmet and OTML applying the tests set out in section 1.5 of
National Instrument 43-101. . I have no prior involvement with the property that is the subject of the Report.
K. I have read National Instrument 43-101 and Form 43-101F1, and the Technical
Report has been prepared in compliance with both of them. I consent to the filing of the Report with any stock exchange and other regulatory
authority and any publication by them, including electronic publication in the public company files on their websites accessible by the public, of the Report.
(Signed and Sealed)
Dated at Toronto, Ontario ROSCOE POSTLE ASSOCIATES INC. August 2, 2005 James W. Hendry, P.Eng. Principal Mining Engineer
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LUKE EVANS
As an author of this report entitled “Technical Report on the Ok Tedi Mining Limited Mount Fubilan Mine Mineral Resource and Mineral Reserve Estimates, Papua New Guinea, Prepared for Inmet Mining Corporation” and dated August 2, 2005 (the Report) and on behalf of Inmet Mining Corporation (Inmet), I hereby make the following statements:
A. My name is Luke Evans and I am a Consulting Geological Engineer with Roscoe
Postle Associates Inc. (RPA). My office address is Suite 501, 55 University Avenue, Toronto, Ontario M5J 2H7. I am a Qualified Person for the purposes of National Instrument 43-101 of the Canadian Securities Administrators.
B. I have received the following degrees:
• B.A.Sc. (Geol. Eng.) 1983 - University of Toronto, Toronto, Ontario • M.Sc. (MinEx) 1986 - Queens University, Kingston, Ontario
C. I am registered as a Professional Engineer in the Province of Ontario and I am
designated as a Consulting Engineer. I am a Member of the Canadian Institute of Mining, Metallurgy and Petroleum, and the Prospectors and Developers Association of Canada.
D. I am a Qualified Person for the purposes of National Instrument 43-101. E. This Report is based on my personal review of information provided by Ok Tedi
Mining Limited (OTML) and Inmet and on information available in public files. My relevant experience for the purpose of the Report is:
• Exploration Geologist, Ontario, 1984 to 1985 • Mine Exploration Geologist, Chibougamau, Québec, 1986 to 1992 • AFRI Project Geoscientist, Toronto, 1993 • Supervisor, Ontario Drill Hole Database, 1994 • Consulting Geologist with RPA from 1995 to present
F. I have been practicing as a professional geologist for over 20 years. G. I visited the Mount Fubilan Mine from March 7 to 11, 2005. H. I am responsible for the geology and Mineral Resource related parts of this
Report.
I. I am not aware of any material fact or material change with respect to the subject matter of the Report, which is not reflected in the Report, the omission to disclose which makes the Report misleading.
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J. I am independent of OTML and Inmet applying the tests set out in section 1.5 of National Instrument 43-101. I have no prior involvement with the property that is the subject of the Report.
K. I have read National Instrument 43-101 and National Instrument 43-101F1 and
this Report has been prepared in compliance with both of these Instruments. I consent to the filing of the Report with any stock exchange and other regulatory
authority and any publication by them, including electronic publication in the public company files on their websites accessible by the public, of the Report.
(Signed and Sealed) Dated at Toronto, Ontario ROSCOE POSTLE ASSOCIATES INC. August 2, 2005 Luke Evans, M.Sc., P.Eng. Consulting Geological Engineer
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GERD WIATZKA
As an author of this report entitled “Technical Report on the Ok Tedi Mining Limited Mount Fubilan Mine Mineral Resource and Mineral Reserve Estimates, Papua New Guinea, Prepared for Inmet Mining Corporation” and dated August 2, 2005 (the Report) and on behalf of Inmet Mining Corporation (Inmet), I hereby make the following statements:
A. My name is Gerd Wiatzka and I am Principal, Manager Mining with SENES
Consultants Limited (SENES). My office address is 121 Granton Avenue, Unit 12, Richmond Hill, Ontario, L4B-3N4. I am a Qualified Person for the purposes of National Instrument 43-101 of the Canadian Securities Administrators.
B. I have the following degree:
• B.A.Sc., (Honours) Civil Engineering, 1974, University of Waterloo
C. I am registered as a Professional Engineer in the Province of Ontario. D. I am a Qualified Person for the purposes of National Instrument 43-101. E. This Report is based on my personal review of information provided by Ok Tedi
Mining Limited (OTML) and Inmet and on information available in public files. My relevant experience for the purpose of the Report is:
• Senior Environmental Engineer with SENES from 1991 to present • SRK Toronto Branch Manager in 1991 • Director Information Services for Noranda Inc, from 1986 to 1990 • Manager Business Services fro Noranda Inc. from 1984 to 1986 • Construction and Environmental Manager for Mining Corporation of
Canada Inc. from 1978 to 1983 • Project Engineer for Kilborn Engineering Ltd. from 1974 to 1978
F. I have been practicing as a professional engineer for over 30 years. G. I visited the property from March 7 to 11, 2005. I am responsible for the
environmental aspects of this Report.
H. I am not aware of any material fact or material change with respect to the subject matter of the Report, which is not reflected in the Report, the omission to disclose which makes the Report misleading.
I. I am independent of OTML and Inmet applying the tests set out in section 1.5 of
National Instrument 43-101. I have no prior involvement with the property that is the subject of the Report.
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J. I have read National Instrument 43-101 and National Instrument 43-101F1 and this Report has been prepared in compliance with both of these Instruments.
I consent to the filing of the Report with any stock exchange and other regulatory
authority and any publication by them, including electronic publication in the public company files on their websites accessible by the public, of the Report.
(Signed and Sealed) Dated at Toronto, Ontario SENES Consultants Limited August 2, 2005 Gerd Wiatzka, P.Eng. Principal, Manager Mining
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26 APPENDIX A
List of Acts, Amendments and Change Notices
(source OTML Registration of Environmental Obligations Allens Arthur Robinson, 27 2
2003) • The Mining (Ok Tedi Agreement) Act Chapter 363 (the Ok Tedi Agreement Act)
• The Agreement dated 22 March 1976 set out in the Schedule to the Ok Tedi Agreement Act (as
amended, the Principal Agreement)
• The Mining (Ok Tedi Supplemental Agreement) Act Chapter 363A (the First Supplemental
Agreement Act), as amended
• The Supplemental Agreement dated 26 June 1980 set out in the Schedule to the First
Supplemental Agreement Act (as amended, the First Supplemental Agreement)
• The Mining (Ok Tedi Second Supplemental Agreement) Act Chapter 363B (the Second
Supplemental Agreement Act), as amended
• The Second Supplemental Agreement dated 26 February 1981 set out in the Schedule to the
Second Supplemental Agreement Act, as amended
• The Mining (Ok Tedi Third Supplemental Agreement) Act Chapter 363C (the Third Supplemental
Agreement Act), as amended
• The Third Supplemental Agreement dated 4 March 1982 set out in the Schedule to the Third
Supplemental Agreement Act, as amended
• The Mining (Ok Tedi Fourth Supplemental Agreement) Act Chapter 363D (the Fourth
Supplemental Agreement Act), as amended
• The Fourth Supplemental Agreement dated as of 1 March 1984 set out in the Schedule to the
Fourth Supplemental Agreement Act, as amended
• The Mining (Ok Tedi Fifth Supplemental Agreement) Act Chapter 363E (the Fifth Supplemental
Agreement Act), as amended
• The Fifth Supplemental Agreement dated as of 1 August 1985 set out in the Schedule to the Fifth
Supplemental Agreement Act, as amended
• The Mining (Ok Tedi Sixth Supplemental Agreement) Act 1986 No 27 of 1986 (the Sixth
Supplemental Agreement Act), as amended
• The Sixth Supplemental Agreement dated as of 28 February 1986 set out in the Schedule to the
Sixth Supplemental Agreement Act, as amended (the Sixth Supplemental Agreement)
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• The Mining (Ok Tedi Seventh Supplemental Agreement) Act 1986 No 39 of 1986 (the Seventh
Supplemental Agreement Act), as amended
• The Seventh Supplemental Agreement dated as of 10 July 1986 set out in the Schedule to the
Seventh Supplemental Agreement Act, as amended
• The Mining (Ok Tedi Restated Eighth Supplemental Agreement) Act 1995 No 48 of 1995 (the
Restated Eighth Supplemental Agreement Act)
• The Restated Eighth Supplemental Agreement dated as of 4 August 1995 set out in the Schedule
to the Restated Eighth Supplemental Agreement Act
• The Mining (Ok Tedi Mine Continuation (Ninth Supplemental) Agreement) Act 2001 No 7 of
2001 (the Mine Continuation Agreement Act)
• The Mine Continuation Agreement dated as of 11 December 2001 set out in the Schedule to the
Mine Continuation Act (the Mine Continuation Agreement).
• The Mine Closure and Decommissioning Code is the Third Schedule to the Mine Continuation
Agreement Act.
• The Approved Proposals (as defined in the Principal Agreement) comprising the Feasibility Study
and Development Proposals Supplement dated November 1979 completed under the Principal
Agreement, approved by the State in accordance with the Principal Agreement subject to certain
conditions set out in the instrument of approval dated 29 February 1980 (the Approved Proposals),
as amended and varied in accordance with the Principal Agreement
• Change Notice 1/29.2 - Alternate Tailings Disposal System, as approved by the State in
accordance with the Principal Agreement and subject to the conditions of approval
• Change Notice 2/29.2 - Environmental Management, as approved by the State in accordance with
the Principal Agreement and subject to the conditions of approval
• Change Notice 3/29.2 - Tailings Disposal System, as approved by the State in accordance with the
Principal Agreement and subject to the conditions of approval
• Change Notice 5/29.2 - Interim Tailings Disposal System, as approved by the State in accordance
with the Principal Agreement and subject to the conditions of approval
• Change Notice 5/29.2 - Interim Tailings Disposal System (amended), as approved by the State in
accordance with the Principal Agreement and subject to the conditions of approval
• Change Notice 5/29.2 - Interim Tailings Disposal System (addendum), as approved by the State in
accordance with the Principal Agreement and subject to the conditions of approval
• Change Notice 26/4.2; 8/29.2 - Permanent Tailings, as approved by the State in accordance with
the Principal Agreement and subject to the conditions of approval
• Change Notice 27/4.2; 9/29.2 - Permanent Tailings System Amendment, as approved by the State
in accordance with the Principal Agreement and subject to the conditions of approval
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• Change Notice 28/4.2; 10/29.2 - Interim Tailings System, as approved by the State in accordance
with the Principal Agreement and subject to the conditions of approval
• Change Notice 29/4.2; 11/29.2 - Interim Tailings System, as approved by the State in accordance
with the Principal Agreement and subject to the conditions of approval
• Change Notice 30/4.2; 12/29.2 - Interim Tailings System, as approved by the State in accordance
with the Principal Agreement and subject to the conditions of approval
• Change Notice 31/4.2; 13/29.2 - Interim Tailings System Amendment; Permanent Tailings System
Further Amendment; and Waste Dumping Amendment, as approved by the State in accordance
with the Principal Agreement and subject to the conditions of approval
• Change Notice 32/4.2; 14/29.2 - Tailings System Further Amendment, as approved by the State in
accordance with the Principal Agreement and subject to the conditions of approval
• Change Notice 35/4.2; 15/29.2 - Project Stages, as approved by the State in accordance with the
Principal Agreement and subject to the conditions of approval
• Change Notice 39/4.2; 16/29.2 - Interim Tailings System Further Amendment, as approved by the
State in accordance with the Principal Agreement and subject to the conditions of approval
• Change Notice 42/4.2; 17/29.2 - Tailings System Further Amendment, as approved by the State in
accordance with the Principal Agreement and subject to the conditions of approval
• Change Notice 43/4.2; 18/29.2 - Tailings System Further Amendment, as approved by the State in
accordance with the Principal Agreement and subject to the conditions of approval
• Change Notice 44/4.2; 19/29.2 - Environmental Monitoring and Environmental Facilities, as
approved by the State in accordance with the Principal Agreement and subject to the conditions of
approval
• Change Notice 45/4.2; 20/29.2 - Overburden Disposal (Southern Dumps), as approved by the
State in accordance with the Principal Agreement and subject to the conditions of approval
• Change Notice 47/4.2; 21/29.2 - Dredging Trial, as approved by the State in accordance with the
Principal Agreement and subject to the conditions of approval
• Change Notice 48/4.2; 22/29.2 – Tailings System Further Amendment, as approved by the State in
accordance with the Principal Agreement and subject to the conditions of approval
• Change Notice 48A/4.2; 21A/29.2 – Continuation of Dredging, as approved by the State in
accordance with the Principal Agreement and subject to the conditions of approval
• Change Notice 49/4.2; 23/29.2 – New Environmental Regime, as approved by the State in