Australia's Newcrest Mining, which jointly owns the Golpu mine in Morobe Province with Johannesburg-based Harmony Gold, said on Tuesday new exploration work pointed to revised reserves estimates of 5.4 million tonnes of copper and 12.4 million ounces of gold.
This is an increase of 4.7 million tonnes of copper and 11 million ounces of gold compared with previous estimates provided by the companies.
Papua New Guinea holds the rights to buy up to 30 percent of any mineral discovery at Wafi and Golpu. The CEO of Harmony Gold, the world's fifth largest gold producer, said last week the government had signalled its intent to take up the stake, if it is able to pay for it.
If the government chooses to take the whole stake, the interests of Newcrest and Harmony would each drop to 35 percent and the cost of development would be split three ways. Newcrest estimates the mine would cost $4.8 billion to develop but said the figure was preliminary, give "current weaker conditions".
The mine is estimated to have a life of 26 years with annual production of up to 550,000 ounces of gold and 330,000 tonnes of copper, Newcrest says. At today's metals prices, the metals could fetch roughly $3 billion in total.
Papua New Guinea's leaders have long sought ways to reclaim the country's role as a world supplier of copper to sustain economic growth and ease concerns of political instability.
But the government's goals are likely to be crimped as major miners are under pressure to conserve capital amid uncertainty over global growth, rising costs and falling commodity prices.
Miners are also concerned that the Papua New Guinea government maybe make major changes to mine ownership rules with a move to local communities, a policy switch being driven by the mines minister Byron Chan.
Swiss-based Xstrata said in June it was considering a whole or partial sale of its 81.8 percent interest in a copper project in western Sandaun Province as part of a review of its development projects worldwide.
Plans by Canada-based Nautilus Minerals to mine copper in territorial waters off Papua New Guinea have also been disrupted by an ownership dispute with the government.
On Bougainville Island, the once prolific Panguna copper mine remains idle more than 20 years after a violent secessionist movement forced its closure. Global miner Rio Tinto , which owns the mine, last week told Reuters the company had no plans to reopen it anytime soon.