The US$1.4 billion Ramu nickel project in Papua New Guinea is on schedule for completion and commissioning before the end of the this year, part-owner Highlands Pacific Ltd. (HIG.AU) said in a quarterly report Wednesday.

Work on the project, set to produce 31,150 metric tons of nickel and 3,300 tons of cobalt annually, has continued peacefully since upheaval in May that left a number of Chinese workers hospitalized, Highlands said.

Ramu is majority owned by China Metallurgical Group Corp., or MCC, while Highlands Pacific has an 8.56% interest in the project, with an option to raise its stake to 11.30%.

Success of the high-pressure acid leach Ramu project is closely watched as a gauge for other such operations such as Vale's (VALE) Goro project in New Caledonia.

Separately, Highlands said a pre-feasibility study at Xstrata Plc's (XTA.LN) US$2.57 billion Frieda River copper-gold project in Papua New Guinea, where Highlands owns a 16.9% stake, is considering an enlargement of the mine.

A 2008 scoping study envisaged production of 160,000 tons of copper and 240,000 troy ounces of gold annually at 26 U.S. cents a pound and US$700/oz.

"Higher throughput rates are now being considered as part of the pre-feasibility study," Highlands said in a statement.

Construction is planned to start in 2012, and output in 2016.

-By Elisabeth Behrmann, Dow Jones Newswires;

61-2-8272-4689 elisabeth.behrmann@dowjones.com
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