Diversified metals company Marengo Mining has taken a further step to develop its Yandera copper/molybdenum/gold project, in Papua New Guinea (PNG), by signing a memorandum of understanding (MoU) with China Nonferrous Metal Industry’s Foreign Engineering and Construction Company (NFC).

The MoU established a framework for cooperation to establish the cost and programme for the delivery of the Yandera project, while the current definitive feasibility study (DFS) was being completed.

The DFS was scheduled for completion by the end of this year, and would be reported to the market during the first quarter of 2011.

The DFS was set to provide the foundation for the financing and development of a large-scale, long-life operation to start at Yandera, with ore production anticipated to start at around 25-million tons a year, and ramp-up to 50-million tons a year, making it one of the significant new copper/molybdenum projects in the world.

ASX- and TSX-listed Marengo said in a statement that the MoU discussions with NFC would be done with a view of entering into a formal construction agreement, as well as a formal financing agreement.

“While the foundation of the MoU is the construction and engineering contract for the Yandera project, it is important to note that the MoU also contemplates NFC facilitating project finance and concentrate offtake for the project, together with potentially investing either in Marengo or the project both” said Marengo MD Les Emery.

“This illustrates the broad-ranging nature of the relationship we have established,” he added.

The MoU includes an indicative timetable, which contemplates the start of project construction during the first half of 2012, following the completion of a formal engineering, procurement and construction contract and approved financing by November 2011.

The Yandera concentrate is expected to enter world markets from 2013/14 financial year.

The Yandera project has a Joint Ore Reserves Committee-compliant resource of 4.9-billion pounds of copper and 176-million pounds of molybdenum plus gold, silver and rhenium.