PAPUA NEW GUINEA - Xstrata assesses Frieda River stake

Copper-mining giant Xstrata is assessing options for its stake in the Frieda River Copper Project in Papua New Guinea, potentially worth more than $2 billion, as part of a review of its development projects worldwide.

An Xstrata Copper spokesperson says, “Xstrata Copper is in the midst of an exciting growth phase with projects under construction to increase production by more than 60% to 1.5 million tonnes per annum over next three years, including our Antapaccay project which is on track to start production in the second half of this year, and the construction of our world-class Las Bambas project.

“We are continually evaluating our industry-leading portfolio of development projects and assessing the best way to advance these projects, maximize their value to Xstrata and ensure the best outcome for all stakeholders. As part of this process we are assessing the interest of other investors in the Frieda River Project in Papua New Guinea. No decision has been made yet and this could result in a full divestment of our 81.82% interest in the Frieda River Project, a partial divestment or no divestment at all.

“We remain committed to advancing our 2012 work schedule to ensure the delivery of our Frieda River Project feasibility study to our joint venture partner this December.”

Highlands Pacific owns the remaining 18.2% in the project and industry analysts say its partner in the Ramu Nickel Project in Papua New Guinea, Metallurgical Corporation of China (MCC), could be interested in the Xstrata share.

The capital cost of the project could fall if natural gas can be secured as the power supply for Frieda River, which will be outlined in the feasibility study. A pre-feasibility study in 2010 estimated the project hosts 12 million tonnes of copper and 18.5 million ounces of gold and could produce 246,000 tonnes of copper per annum.

www.xstrata.com