Tag Archives: Newcrest Mining

Wafi-Golpu costs come down

Barry FitzGerald | The Australian

SOUTH Africa’s Harmony Gold has tipped that the cost for stage one of the Wafi-Golpu gold and copper project in Papua New Guinea would be “dramatically less’’ than the $US4.8 billion suggested in the original preliminary feasibility study into the project’s development.

Wafi-Golpu is a 50:50 joint venture between Melbourne-based Newcrest and Harmony, with the pair planning to release an updated pre-feasibility study on the project before the end of the year. The original PFS, released in 2012, spooked investors because of the size of investment required to get the project into production.

Apart from the upfront cost of $US4.8bn, the original PFS pointed to life-of-mine capital costs of more than $US9bn.

Speaking at the Denver Gold Forum this week, Harmony chief executive Graham Briggs said the new PFS was almost done. “It will go through a gate-keeping process and then we will be able to talk about the capital, but it will be far more achievable,’’ he said of the first-stage development.

Once it was released, it would be clear that funding the development by the companies — both of which have come under balance sheet pressure from last year’s collapse in the gold price — will not be an issue.

Wafi is a 7.2 million ounce gold resource that sits adjacent to the Golpu deposit, a world-class resource of 20.3m ounces of gold and 9m tonnes of copper.

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NJV undertakes environmental impact assessment at Waisoi project

namosi

Watisoni Butabua | Fiji Village

The Namosi Joint Venture is currently undertaking an environmental impact assessment at the Waisoi project.

The Waisoi Project is a copper and gold project.

Country Manager of Namosi Joint Venture Greg Morris said this is to assess the potential social and environmental impacts of a mine at Waisoi.

Morris said they are working and making the Waisoi project one that can deliver sustainable benefits to all including Fiji and the host community.

He said they will work with the government, the landowners and villages to achieve that objective.

The Namosi Joint Venture is exploring for the mineral resources in the Namosi and Naitasiri province which covers an area of approximately 724 square kilometres.

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Solomon mine bondholders count losses not riches

David Yong, Benjamin Purvis and David Stringer | Bloomberg

Locals walk through the Gold Ridge mine in 2003

Locals walk through the Gold Ridge mine in 2003. Photographer: Torsten Blackwood/AFP via Getty Images 

The unraveling of a two-year old gold-mining venture in Solomon Islands, a Pacific Ocean nation named for the biblical king known for his wisdom and wealth, is burning bondholders.

Australia’s St Barbara Ltd., which is seeking an exit from the Gold Ridge operation it acquired in 2012 in a $545 million takeover, has seen the value of its notes tumble to 79.75 cents on the dollar last week. More pain may loom: Standard & Poor’s pegs their value at just 30 cents to 50 cents on the dollar in the event of default.

The odds of that happening are rising after defaults by compatriot miners Mirabela Nickel Ltd. and Midwest Vanadium Pty. in the past year. Metal producers globally are in retreat from a decade-long $616 billion investment spree in mines as supply gluts and muted Chinese demand weigh on prices.

“We are in an environment where commodity prices are generally not supporting top-line growth,” Ric Ronge, a money manager in Melbourne at Pengana Capital Ltd., said by phone on Aug. 27. His firm oversees about A$1.2 billion ($1.1 billion) of assets. “Some companies that are very leveraged have likely been treading on solvency issues.”

Miners have cut staff, slashed budgets and shut operations as gold slumped 28 percent in 2013, the biggest annual decline in more than three decades. Producers including the biggest gold miner Barrick Gold Corp. and Newcrest Mining Ltd. recorded at least $26 billion in writedowns last year.

Returns Lag

Bonds sold by global mining and metal producers have returned 3.6 percent this year and offered 511 basis points over Treasuries as of Aug. 29, according to the Bank of America Merrill Lynch U.S. High Yield Metals & Mining Index. That’s less than the 6.9 percent return for global corporate bonds, which have a yield premium of 109 basis points.

Solomon Islands, which is three hours away by charter flight from Brisbane, is part of an archipelago named by Spanish navigator Alvaro de Mendana after the Israelite King Solomon, whose reign is described in the Bible as a period of great prosperity. The nation experienced unrest in the late 1990s and early 2000s prompting intervention by Australia, New Zealand and other neighboring countries to restore order.

Gold Ridge

Tropical Cyclone Ita flooded an access road to the Gold Ridge mine in April, halting production. When staff returned in June to assess damage, hundreds of illegal miners had set up encampments, forcing Melbourne-based St Barbara to evacuate workers from the site. The Australian producer is negotiating with the Solomon Islands government to transfer control after booking pretax impairments of about A$280 million against the mine in the past two years, according to filings.

“There’s a possibility, which is well advanced, of a win-win where the government can secure the future of the asset and we can leave with a clean exit with limited liabilities,” Chief Executive Officer Bob Vassie said in a phone interview Aug. 29. “That’s what we are shooting for.”

The company’s $250 million of 8.875 percent notes due April 2018 fell to 79.75 cents on the dollar last month from 99.49 cents when they were issued in March 2013, according to Bloomberg prices. The yield has risen to 16.52 percent, or 15.3 percentage points more than Treasuries.

Highest Risk

St Barbara is rated Caa1 by Moody’s Investors Service, a grade it reserves for borrowers deemed to be in “poor standing.” (SBM) It has the highest risk of default among Australia’s junk-rated miners based on measures of liquidity, analyst Saranga Ranasinghe said by phone on Aug. 28.

In a default, the bonds may have a recovery value of 30 to 50 percent, S&P estimated in March, and the company’s going-concern value may be as little as A$175 million to A$200 million. That hasn’t changed, analyst Brenda Wardlaw said by phone on Aug. 28.

St Barbara’s cash fell 32 percent to A$79 million as of June 30 from a year earlier, according to its financial statement released Aug. 27. Its debt includes a $75 million loan at 8.5 percent interest from RK Mine Finance, payable over 33 months from end-February 2015. The lender has priority to claims over bondholders, according to S&P.

The miner’s plight in the Pacific underscores the weak performance in Australia’s junk-rated miners. They returned 1.8 percent this year in the Bank of America’s Metals & Mining Index, while Canadian producers gained 9.9 percent.

Demand Drops

“A lot of that aggressive scramble for yield that took investors into junk-rated paper seems to have petered out a few months ago,” said Michael Bush, head of credit research at National Australia Bank Ltd. “Risk tolerance has narrowed and people are being a lot more discerning.”

St Barbara’s two mines in Western Australia produced profits in the year ended June 2014, accounting for 75 percent of revenue of A$533.8 million, according to a Aug. 27 statement. High costs at the company’s Pacific operations, which include Gold Ridge and the Simberi mine in Papua New Guinea, dragged the producer to a net loss of A$500.8 million in the period, it said.

“A lot of the acquisitions in the gold sector were made when prices were very high,” S&P’s Melbourne-based Wardlaw said. “It’s been difficult to get an adequate return now that prices have been lowered for a period of time.”

Cash Flow

The company is seeking to raise output at its Simberi mine to improve cash flow, Vassie said. “It’s on the right path to deliver cash and we have a very strong cash generating asset at Leonora” in Western Australia, he said by phone from Melbourne. “That gives us the confidence that we have stabilized the company, we haven’t defaulted on any payments and the big bond item is due only in 2018,” he said.

Building cash flow is “critical” before debt repayment kicks in, Rob Craigie, an analyst in Melbourne at Baillieu Holst, said by phone on Aug. 27. That hinges on the operating performance at its mines in Western Australia and Papua New Guinea, gold prices and capital expenditure, he said.

The Gold Ridge mine poured its first gold in August 1998 and was shuttered after two years. Then-owner Delta Gold Ltd. exited in June 2000, after which workshops and stores were vandalized. Allied Gold Ltd. bought the mine in 2009 before the company was taken over by St Barbara in September 2012.

Investors may see more defaults in the industry as the cost of capital remains high for miners with weak balance sheets, Pengana Capital’s Ronge said.

“We aren’t expecting a strong across-the-board rally in commodities over the next six to 12 months,” he said. “It really comes down to their ability to control costs and restructure their debt.”

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Call to focus outside mining on Lihir

The National aka The Loggers Times

A COMMUNITY leader on Lihir Island, in New Ireland, says the leaders should now be focused on sustaining the economy after the mine closes.

polyp_cartoon_Trickle_Down_EconomicsLihir Island hosts one of the world’s largest and richest mining projects in being developed by Newcrest Mining Limited.

Lihir Sustainable Development Programme chairman Ben Misren told Public Enterprises and Investments Minister Ben Micah, Lihir leaders and the business community that the economy experienced on the island would soon be gone.

“The one we are fighting for is the ongoing economy after mine closure,” he said. Misren was speaking during the opening of a new poultry layout facility in Lihir on Monday by Micah.

Present were business project partners Mainland Holdings, suppliers of Niugini Tablebirds.

“Today, you are witnessing one of those projects that (will continue) after the mine closure,” he said.

“We, as Lihirians, should work together to build a non-mining economy that will sustain the livelihood of our people, our children and the future leaders of this island.

“Mining will go tomorrow. What is left then is something that is indicated by one such project.”

Micah paid tribute to Mainland Holdings board chairman William Lamur and Colin Vale of the Anitua Group of Companies “for their sleepless nights” and the thoughts of “ever making it work”.

“It is not easier than what it is now. It was a nightmare. We thought we were gonna go down,” Micah said.

Misren assured the crowd that there were more such projects coming up, including an extension to the piggery to include an abattoir and meat birds for the poultry project.

“Our biggest task as Lihirians is to ensure we control, manage and own these projects.”

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Despite reports Commission has NOT called for end to marine dumping

Despite media reports to the contrary it appears the Constitutional and Law Reform Commission has NOT recommended an end to the controversial practice of dumping toxic mine tailings into the ocean.

As Commission Chairperson, Eric Kwa, makes clear in his interview below on Radio Australia, the Commission was persuaded by the big mining companies, including Rio Tinto, that a ban on marine dumping, as exists in most other countries, was not a good idea…

Call for mine waste law reform in PNG

Radio Australia

Papua New Guinea’s Constitutional and Law Reform Commission has called for an end to the dumping of mine waste in the country’s rivers.

Many of PNG’s biggest mines dump their tailings in nearby river systems, sometimes with devastating environmental consequences, like the widespread contamination of the Fly River by the Ok Tedi mine in Western Province.

The Commission visited five mines and spoke to local communities and mining industry representatives as part of a review of laws covering mine waste disposal.

The Commission’s secretary Dr Eric Kwa says it’s time riverine tailings disposal was brought to an end.

Presenter: Liam Fox

Speaker: Dr Eric Kwa, Constitutional & Law Reform Commission, PNG

KWA: We are asking for a total ban on this method of disposing of waste, so we’re suggesting that the Mining Act be amended to prohibit the disposal of mine tailings into the river system.

FOX: And why did you come to that conclusion, why did the Commission come to that conclusion?

KWA: We came to the conclusion basically on three main fronts. The first one is a lot of the people in Papua New Guinea in the rural areas and particularly next to the mining sites, they live and depend on the river system, and so the rivers are very critical to their livelihood. The second thing is that we looked at the practice around the world, we realise that only Indonesia and Papua New Guinea allow for river iron tailings. The rest of the world has already abandoned this practice and so we needed to keep in line with the international best practice. The third part of it is that communities basically say that they don’t want anymore river iron tailings, so basically the communities themselves, the people themselves have said enough is enough. We have seen the degradation of the river in Fly River, we’ve seen it in Porgera River, and we do not want to see anymore of this happening in PNG.

And so based on those three main reasons we agreed that we should ban river iron tailings.

FOX: That’s riverine and deep sea disposal?

KWA: Ah no, deep sea we did not propose the banning of it, basically because from the current technical advice that we have been given, deep sea tailings is moderately acceptable and given the current geographical and geological situation in Papua New Guinea, that particular option would be more acceptable. And in fact, one of the large mining companies suggested to us that we should ban river iron tailings, but deep sea we could approach it more cautiously and that’s the Rio Tinto. They came up with some very interesting suggestions on handling this particular issue. When we talked to the Chamber, they said we could look at it, we should allow that option to be available, because many parts of the country where mines are being located, the geography and the geological conditions are quite shakier. It is not feasible to do a storage facility in those sites and so maybe the mining, dumping it at sea would be the next best option.

FOX: And so your recommendation wouldn’t affect mines that are currently underway or disposal that’s currently underway, but in future?

KWA: Yes, we are suggesting that this before all future mines. We couldn’t pass the current mining, because of the fact that they already exist under current legal regimes and they all see contracts in place and a lot of money has been spent on developing this method of disposal and so if we take a knife and cut across the whole mining network, then it’s going to really affect the operations of these mining companies and also the economy of the country.

FOX: When you were looking at other systems, other ways of disposing mining waste. What were the other methods that were used beside Riverine disposal and deep sea disposal?

KWA: Well, we were looking at a mine tailings dam, we had the first time now, that’s at the Morobe mine in Morobe Province. They actually built a dam, and they’ve actually they’re still storing the mine waste in the dam, according to our discussions with the mining sector, they said it seems to be stable and they are able to contain the waste.

We’ve also looked at other mine tailings, where you can also with the current technology, you could actually do some cement pastings, like you put in some of chemicals so they would become firm, so you don’t have liquid waste and then there are also other practices where you could actually try and use other chemicals to neutralise the toxicity of the waste that’s coming up from the mining projects.

FOX: And what do you think the reception will be to this recommendation from both the government and the mining industry?

KWA: Ah well, for riverine tailings, we’ve already given the mining industry the opportunity to comment on the report. They are basically in support, maybe subtly, but they have been on our working committee and they fully supported our work and we gave these draft recommendations to them to comment on for two months, so they did look at our recommendations, and they’ve come back supporting our recommendation on this particular aspects of mine tailings. And I can tell you that Liam, over the last couple days, we’ve been getting a lot of commentaries on the Facebook, on email, out in the public. People are very supportive of our recommendations. We are still waiting to, not waiting, but we’re giving the public at least a month and then we will send the report to government, that’s when the government will make response to us.

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MCC, Newcrest and Harmony Gold refuse entry to government appointed Commission

keepout

Mines refuse entry to team

Post Courier

AN infight among government agencies resulted in the Constitutional Law Reform Commission being barred access by three mining companies into their sites.

This was made known during a public seminar convened by the commission to present its report on the “Review of environmental and mining laws relating to management and disposal of tailings”.

The commission’s secretary Eric Kwa said the working committee had planned on visiting a total of five mines.

However, they were refused entry by the operators at Hidden Valley in Morobe, Lihir in New Ireland and Ramu Nickel project in Madang. They were allowed in at Ok Tedi, Western Province, and Porgera in Enga Province.

Mr Kwa said the incident stemmed from an alleged infighting which arose during the course of the exercise with a department (named), whom he stated had accused the commission to be hijacking their roles and function.

“We flew into Hidden Valley and when we arrived at the gate we were told that they had decided not to let us in. This is a government department trying to review the law. Who on earth has the right to stop the government from entering a mining site.

“We flew to Madang and to Lihir only to be told the same thing. Why? We only went there because we wanted to know how the law is being applied, so that we could frame them in a manner that would be good for our people.

“We had gone there because the people had spoken and because the government has listened and given us clear directions,” he said.

Mr Kwa stressed the entity to be mandated by the government to review all laws.

He said the team had not gone with the intent to criticise the existing mines about their operations.

banned1

 

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Constitutional Commission calls for ban on river and marine waste dumping

CONSTITUTIONAL & LAW REFORM COMMISSION ON DISPOSAL LAWS

EMTV

The Constitutional and Law Reform Commission is pushing for a ban on deep sea and river tailings placement in Papua New Guinea.

These two proposals were amongst the 19 recommendations that have been drafted and will be presented to the Minister for Justice and Attorney General, for perusal and cabinet approval.

Professionals from various government departments and the private sector attended a public seminar at the Hideaway Hotel in Port Moresby, to make final commendations before presenting it to the minister.

There are a total of eight mines in PNG. three of these are purely gold mines, three gold and silver mines, one copper and gold and one nickel and copper.

These facts make our country one of the world’s resource rich nations, and pumps about three quarters of revenue into the country’s economy.

However, the issue on management of mine tailings disposal is said to have been overlooked over the years by government, developers and stakeholders, causing a national threat on the health of future generations, particularly on populations in the special mining lease areas.

Today’s seminar discussed the Constitutional Law and Reform Commission’s 19 recommendations to review the Environment and Mining laws relating to management and disposal of mine tailings.

Amongst solutions was the ban of deep sea and river mine waste disposals by mines in PNG.

These recommendations have been drafted by the working committee made up of members from the Mineral Resource Authority, Departments of Mineral Policy and Geohazards management, environment and conservation, health, mines and petroleum, environment, research and development and the University of Papua New Guinea.

They strongly recommended that the national government seriously look at the health and social impacts of mine waste disposal, rather than concentrating more on revenue generation.

However, other experts present at the seminar this morning said otherwise.

The working committee found many flaws in the environment and mining laws relating to mine waste disposal.

One of them was the absence of a health impact assessment.

Similar to the environment impact assessment, the committee suggested that an independent body be established to oversee health and social impact assessments in all mine sites.

The recommendations are more administrative, and concentrated more on the environment, health and social impacts.

The Reform Commission said it may be too late to apply these recommendations on existing mines, but it is important that they be considered for future prospects.

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