Bougainville’s Me’ekamui dismisses share spat

Bougainville Revolutionary Army fighters look down on the Panguna mine in 1996

Bougainville Revolutionary Army fighters look down on the Panguna mine in 1996

Radio New Zealand | 26 August 2016

The leader of Bougainville’s Me-ekamui rebel group, Chris Uma, says the spat over shares in Bougainville Copper Ltd (BCL) is of no consequence.

A war of words erupted between the governments of Papua New Guinea and Bougainville after multi national miner, Rio Tinto, gave its shares in BCL to them.

PNG later gave its shares to Panguna landowners, a move that infuriated Bougainville President John Momis, who said the shares should all go to his Autonomous Government(ABG).

But the special envoy for Mr Uma, John Jaintong, said it is irrelevant because in Me’ekamui’s view there is no BCL.

“Because in 1989, when the mine was closed, Bougainville Copper walked away, got paid off, [and] large compensation for loss of business and loss of property, and to Me’ekamui, the mine has ceased to exist since 1989 and the land now returned to the people.”

Mr Uma’s special envoy, John Jaintong, said before there can be talk of any mining in Bougainville there has to be a ceremony of reconciliation to acknowledge the 20,000 who died in the civil war.

“That is the only thing that is holding them back. They want to see that that’s done quickly and amicably.” he said.

“Now, give you how they want it played out. They want it hosted by Chris Uma and the Prime Minister on behalf of the paramount chiefs of Bougainville, who own the land, and the Prime Minister of Papua New Guinea. But not by ABG.”

Mr Jaintong said the ABG and President John Momis would be welcome as observers.

Leave a comment

Filed under Human rights, Papua New Guinea

Another environmental disaster for Australia’s world class mining industry

The mine's storage sites hold millions of litres of by-products. (ABC News)

The mine’s storage sites hold millions of litres of by-products. (ABC News)

Pump crews work at abandoned silver mine to keep toxic spill out of Murray-Darling Basin

Mark Willacy | ABC News | 25 August 2016

Queensland Government officials have taken emergency action to stop massive mine storage ponds on the Queensland-New South Wales border discharging heavy metals into the Murray-Darling system, the ABC can reveal.

Heavy rainfall this week threatened to trigger a spill of the processing ponds and dams at the Texas silver mine in southern Queensland.

The mine’s storage sites hold about 240 million litres of by-products such as copper, aluminium, iron, manganese, zinc and nickel.

Queensland’s Environment Department is managing the site after its former owners went broke and abandoned the mine last year.

The ABC last year obtained an internal government document revealing it could cost up to $10 million to fully rehabilitate the site.

The government holds just $2 million from the former owners in financial assurance for the mine site.

The internal document warned that as little as 40 millimetres of rain could trigger a spill from site and send cyanide and other heavy metals into the Dumaresq River and into the Murray-Darling Basin.

The Dumaresq is a major source of irrigation water for primary producers in the region.

The site of the silver mine has received more than 90 millimetres of rain in the past 48 hours, while the region has experienced some localised flooding.

In response to the rain, Department of Environment staff and contractors were pumping to minimise the potential for the release of contaminated water, with ponds and dams on the site reaching capacity.

“As soon as this weather event became clear, [the department] had people on the ground, and dispatched additional officers on Wednesday to monitor the situation,” Environment Minister Steven Miles said.

“[The department] has been liaising with its counterparts in New South Wales about site management, and will continue to consult with them about any possible environmental impacts. I want to stress that this is a problem [the department] inherited.”

The minister said the Texas silver mine was an example of why it was important to have a strong financial assurance system, “otherwise taxpayers can be left with the shortfall”.

1 Comment

Filed under Papua New Guinea

Harmony and Newcrest submit application for Wafi-Golpu mining lease

Hidden Valley

Harmony and Newcrest already operate the Hidden Valley mine which is expected to close soon

Allan Seccombe  | Business Day Live | 25 August 2016

HARMONY Gold and its Australian partner Newcrest Mining have submitted an application for a special mining lease for its copper and gold Wafi-Golpu project in Papua New Guinea.

Harmony and Newcrest are equal partners in the Golpu deposit, which has a resource of 824-million tonnes containing 1.05% copper, 0.7 grams per tonne of gold and 1.25 grams a tonne of silver. It also contains 90 parts per million of molybdenum, which is used in various steel applications and as an alloy.

Harmony CEO Peter Steenkamp said recently the partners had pencilled in a two-year wait to secure the lease.

The partners are conducting further work to optimise the costs of bringing Golpu into production, giving Papua New Guinea its largest underground mine, Harmony said on Thursday.

“Further project development will be subject to the granting of the special mining lease, the obtaining of all necessary permits, approvals and agreements, and, ultimately, approval by the boards of both Harmony and Newcrest,” it said.

The Papua New Guinea government has the right to buy a 30% stake in the Golpu project at any time up to the start of mining, which would reduce the partners’ stakes to 35% each, Newcrest said on Thursday.

Harmony wants to grow its gold production to 1.5-million ounces in the next three years, from 1-million ounces this year, to give it the mass to take on the funding of the Golpu project, Steenkamp said.

Harmony has put three South African mines into harvest mode, stopping mining at the operations over the next three to five years and taking more than 200,000oz out of its production profile, leaving it too small to tackle the project, he said.

1 Comment

Filed under Mine construction, Papua New Guinea

Fiji: Chinese to finance Tuvatu gold mine

china

China’s largest iron ore miner, Ansteel Group, to finance the Tuvatu gold mine

Lion One Announces MOU for EPC Contract and Vendor Financing with Ansteel-CapitalAsia for Construction of the Tuvatu Gold Project

Lion One Metals | Junior Mining Network | 24 August 2016

Lion One Metals Limited is pleased to announce the signing of a non-binding Memorandum of Understanding (MOU) for an EPC Contract and Vendor Financing Agreement with Ansteel-CapitalAsia Global Engineering Inc. (the EPC Contractor, or Ansteel) covering a comprehensive Engineering, Procurement, Construction, and financing package for the development of the Company’s 100% owned and fully permitted Tuvatu Gold Project in Fiji.

The scope of the EPC contract covers the design, construction, start-up testing, and commissioning of the Tuvatu gold processing plant. Ansteel will also furnish all materials, equipment, machinery, tools and consumables, provide quality control and administration, and will develop the Project Health and Safety Plan at the Project Site. In addition to the EPC Contract, Ansteel will also provide vendor financing for up to 80% of the anticipated value of the EPC Contract in the form of a Deferred Payment Amount of approximately US$39,000,000-$44,000,000. The Company will fund a minimum of US$10,000,000 or approximately 20% of the anticipated value of the EPC Contract. The Deferred Payment will be a senior secured obligation of the Company guaranteed by the Company’s assets, to be serviced through a Deferred Payment Plan with 7% annual interest payable in quarterly installments. In connection with the Down Payment, Lion One will issue, subject to TSX-V approval, warrants in the amount of approximately 10% of the Loan Facility at a price of $1.42 per share for a period extending to the maturity date of the earlier of the final scheduled payment under the Deferred Payment Plan or 5 years from closing. Early repayment of the Deferred Payment Amount may occur any time without charge.

The Company and Ansteel will proceed to preparing definitive binding agreements for the transactions contemplated by the MOU, and are targeting completing the transaction in the fourth quarter of 2016.

The EPC Contractor, Ansteel-CapitalAsia Global Engineering Inc., is a JV company of Ansteel Group Engineering Technology Development Company Ltd and CapitalAsia Consulting (Canada) Inc. The Ansteel Group is based in Liaoning Province in northern China and is that country’s largest iron ore miner and third largest steel maker, with a production capacity exceeding 38 million tons of raw steel and pig iron. Ansteel’s steel unit is focused on products such as hot and cold rolled and galvanized steel sheets, color coating plates, silicon steel, wire rods, steel pipes, and large steel products widely used in automobile manufacturing, construction, ship-building, home electrical appliances, and in the manufacture of railways, pipelines, bridges, and power plants. The company operates several large iron ore mines and more than a dozen steel-rolling and steel production plants worldwide. Ansteel exports its products to over 30 countries including the USA, UK, Japan, and Australia, and is listed on the Hong Kong and Shenzen Stock Exchanges. In 2015 Ansteel was ranked number 451 on Fortune’s Global 500 List.

The Tuvatu Gold Project is located 17 km from the Nadi International Airport on the main island of Viti Levu in Fiji. Discovered in 1987, Tuvatu was advanced by previous owners through underground exploration and development from 1997 through to the completion of a feasibility study in 2000. Acquired by Lion One in 2011, the project has over 100,000 meters of drilling completed to date in addition to 1,600 meters of underground development. Tuvatu is a high grade, low sulphidation, epithermal gold deposit hosted inside a South Pacific-style volcanic caldera, along the Viti Levu lineament, Fiji’s own corridor of high grade gold deposits. In January 2016 the Hon. Prime Minister of Fiji, Mr. V. Bainimarama, formally presented the previously granted Tuvatu Mining Lease to Lion One, concluding the permitting process for the development of an underground gold mine and processing plant at Tuvatu, demonstrating strong government support for Fiji’s 85 year-old gold mining industry.

The Company envisages a low cost underground gold mining operation producing 352,931 ounces of gold at head grades of 11.30 g/t Au over an initial 7 year mine life, including 262,000 ounces at 15.30 g/t through year three, at cash costs of US$567 per ounce with all-in sustaining costs of US$779 per ounce. Total capex of US$48.6 million includes a contingency of US$6.1 million with an 18 month preproduction schedule and 18 month payback on capital. At a US$1,200 gold price the project generates net cash flow of US$112.66 million and an IRR of 52% (after tax). Tuvatu is situated upon a 5 hectare footprint inside a larger 384 hectare mining lease that contains numerous high grade prospects proximal to Tuvatu, at depth, and up to 1.2 km along strike from the resource area, giving the project near-term production potential and further discovery upside inside of one of Fiji’s underexplored volcanic goldfields.

The information in this report that relates to the Exploration Results or Mineral Resources is based upon, and fairly represents, information and supporting documentation compiled by Mr. Stephen Mann, who is an officer and director of the Company and is a member of The Australasian Institute of Mining and Metallurgy. Mr. Mann has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and the activity in which he is undertaking to qualify as a Competent Person under 2012 Edition of the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (JORC Code). Mr. Mann consents to the inclusion in this news release of the matters based on his information in the form and context in which it appears. The Company confirms that it is not aware of any new information or data that materially affects the information included in previous news releases referred to above, and confirms that the form and context in which the findings are presented have not been materially modified from the original news releases. Albert Siega, P. Eng., a full time employee of the Company and Qualified Person as defined by NI 43-101 has reviewed and approved the technical content of this release.

1 Comment

Filed under Fiji, Mine construction

NZ government to weaken laws to allow seabed mining

rip seabed mining

Law change could influence decisions on destructive seabed mining

Green Party | Scoop | 25 August 2016

The National Government’s proposed changes to the law governing seabed mining could make it easier for Trans-Tasman Resources to carry out destructive seabed mining off the South Taranaki coast, the Green Party said today.

Trans-Tasman Resources (TTR) has re-applied to the Environmental Protection Agency (EPA) to mine the seabed off the South Taranaki coast for iron ore, despite its previous application being declined by the EPA.

“The Government’s Resource Legislation Amendment Bill, currently before Parliament, will allow the Minister, rather than the independent EPA, to appoint the panel that considers seabed mining applications,” said Green Party environment spokesperson Eugenie Sage.

“This proposed law change means that National can handpick the people who decide on controversial and high-impact activities like seabed mining and oil and gas drilling.

“The changes in the Bill are clearly an attempt to politicise decision-making and give the Minister greater influence.

“The National Government appears to have proposed this law change after strong lobbying from the mining industry following the original EPA decision to decline TTR’s application to mine the seabed off South Taranaki.

“There was huge public opposition to TTR’s earlier South Taranaki proposal because of the destructive and experimental nature of seabed mining. Nothing has changed since the EPA declined that application which would now justify mining proceeding.

“It is disappointing that the community will once again have to put significant time and energy into mobilising its resources and expertise to make submissions and present evidence to protect the seabed and coastal and marine environment.

“Seabed mining would generate major sediment plumes, and threatens the habitat of Maui’s dolphin and other mammals and marine life,” said Ms Sage.

Leave a comment

Filed under Environmental impact, New Zealand

What is stopping Papua New Guinea’s Panguna mine from re-opening?

momis panguna

The Autonomous Bougainville Government wants to put the operation of the giant Panguna copper mine out to international tender as soon as possible, President John Momis tells Business Advantage PNG. But key considerations—including the exploration licence, the equity structure, landowner rights and dividends and the rehabilitation of the mine—must be decided first.

Kevin McQuillan| Business Advantage PNG | 24 August 2016

Re-opening the Panguna copper mine is potentially extremely lucrative for the Autonomous Region of Bougainville in Papua New Guinea. The mine was closed in 1989 at the start of a two-year civil war—prompted by landowner concerns over the damage to the local environment and the returns they were receiving.

The cost of rehabilitating the mine was estimated in 2014 to be about A$6 billion (K13.72 billion), and revenues for the life of the mine was estimated to be $A75 billion (K177 billion).

During the period it operated, 1972–1989, Panguna provided more than 45 per cent of PNG’s national export revenue, and was the biggest single contributor to government coffers.

Shareholding

But the first consideration in re-opening the mine is the shareholding says John Momis, the President of the Autonomous Bougainville Government (ABG).

He tells Business Advantage PNG this became an issue after Rio Tinto walked away in June, dividing its shareholding in Bougainville Copper Ltd (BCL) equally between the ABG and the national government.

This week, Prime Minister Peter O’Neill reportedly said the government would give its shares to landowners, drawing the ire of Momis, who believes the ABG should be given those shares, giving it a majority shareholding.

‘I think in general the landowners support the ABG’s option that the shares should be given to the ABG to be distributed to the landowners under our own mining law,’ he says.

O’Neill has not yet said which of the nine landowner groups would be given the national government’s 17 per cent shares in BCL, nor how those shares would be distributed.

Share dilution

Momis says while the majority of Bougainville landowners support the ABG being given the 17 per cent shareholding, a minority support O’Neill. Momis says they are being ‘misled’.

‘When we invite a new developer, they will come with technology and capital and, of course, they will also want [a high level of] shareholding which means the current shareholders will have their shares diluted very much.’

Momis says the amount of shareholding an operator would have is ‘something we would have to negotiate with them.’

‘But what we do know is that they will want equity and not just a small amount because they will be very powerful and the current shareholders will have their share diluted—particularly the 17 per cent if it goes to landowners.

‘The landowners may end up with nothing.

‘Under our proposal, our mining law says—it is a legal requirement—that the landowners (receive) five per cent free carry in a fully developed mine.’

‘If the mine starts, it might expand and extend its operations into other areas, which would entail having more landowners. If the ABG held the shareholding it would take care of new landowners.’

Investment vehicle

Last month, the ABG issued a ‘show cause’ notice to BCL, as to why its exploration licence over Panguna should not be rescinded, after Rio ended its management agreement with BCL. Momis says the ABG has ‘not decided yet’ whether to rescind the licence.

At the moment, BCL’s major asset is its mining data, which Momis agrees would be ‘useless if we took away the exploration licence’.

‘If we don’t have majority (ownership) then it would put us in a situation where we could not agree on access to the data and that doesn’t help us.

‘That’s why we are saying a win-win deal would be to accept our proposal and then allow BCL to unblock and make use of the data.’

Rehabilitation

Momis estimates it would take ‘something like K20 billion to reopen the mine.’ The process could take five years. An incoming mine operator may need to factor in this rehabilitation cost should proposed legal action against Rio to force it to pay for a clean up fail.

Momis says the legal action is the result of Rio refusing ‘to accept any responsibility for the legacy issues, such as environmental damage and the social disruption, health consequences’.

Leave a comment

Filed under Financial returns, Mine construction, Papua New Guinea

Panguna decision undermines Bougainville autonomy says Momis

momis to oneill 21 Aug 2016

“ Prime Minister, the reasons for your decision on the equity suggest that you believe that you know better than the ABG about Bougainville’s mining policy needs. You substitute your views for ours. Yet under the Bougainville Peace Agreement, responsibility for Bougainville mining policy has been transferred, so that these are now matters solely for the ABG.”

Bougainville News | 24 August 2016

Letter from Bougainville President to PM of PNG

Dear Prime Minister,

I refer to your Government’s decision to allocate the 17.4 per cent equity in BCL (recently received from Rio Tinto) to ‘Panguna landowners and the people of Bougainville’. The decision must be rejected by the Autonomous Bougainville Government (the ABG).

You are reported as telling the Parliament on Thursday 18 August 2016 that you:

  • ‘deliberately’ decided that the ABG should not be majority shareholder in BCL,
  • ‘wanted a separate vehicle that the landowners can meaningfully and directly participate in BCL’, and
  • do ‘not believe’ that the 5 per cent interest for landowners in mining operating companies provided under the Bougainville Mining is ‘sufficient enough to compensate some of the suffering the people of Bougainville had’.

Prime Minister, the reasons for your decision on the equity suggest that you believe that you know better than the ABG about Bougainville’s mining policy needs. You substitute your views for ours. Yet under the Bougainville Peace Agreement, responsibility for Bougainville mining policy has been transferred, so that these are now matters solely for the ABG.

We have given careful attention to mining policy. We give landowners veto power over ABG grant of mining licences, giving them real and direct involvement in decision-making. They must be satisfied with conditions and benefits before a project proceeds. A minority 17.4 per cent BCL equity that you propose will not give them any control over decision-making.

ABG policy also guarantees landowners 5% free equity in any mining operating company. If Panguna does re-open, that will be worth much more than 17.4% in the current BCL. Because re-opening will cost about K20 billion, a new developer will definitely be needed. The new capital requirements would then dilute all present BCL equity shares to tiny percentages. So 17.4 per cent in the existing BCL will only make landowners etc. minority shareholders in a company now worth very little.

By comparison, our Act guarantees they will have valuable equity in the fully funded project, if it re-opens. Our act also guarantees separate 1.25 per cent royalty shares each for: 1) mine lease landowners; 2) projects for those landowners; 3) adjacent landowners; and 4) infrastructure development for Bougainville generally.

It also guarantees landowner preference in mine employment and business opportunities. So our law offers very real financial benefits especially to landowners, but also to all Bougainvilleans.

The ABG believes that you are making ill-informed decisions about a complex situation that you clearly do not understand, and which do not bring real benefits to landowners. The decisions undermine autonomy, and are bad for Bougainville.

As the government of all Bougainvilleans, the ABG needs majority BCL shareholding to give it clear decision-making authority about Panguna in the interests of all Bougainvilleans, both landowners and others.

Bougainvilleans ask why you interfere in our mining policy. Do you fear that ABG control of Panguna could provide the revenue needed for Bougainville independence? In fact, no one knows if the agreed process under the Peace Agreement will lead to independence. More important, interfering in mining issues only causes deep anger in Bougainville. That is likely to cause increased support for independence. The only way you can now reduce support for independence is to work in cooperation with the ABG to make people see that autonomy really meets the needs of Bougainville. Supporting our mining policy is an essential start.

The ABG cannot allow your bad decisions to stand. I now offer you a final opportunity to resolve this issue. I request you to direct transfer of the 17.4 per cent to the ABG.

If you refuse to do so, the ABG must use other means to keep clear control of decisions on Panguna. In particular, we will cancel BCL’s exploration licence under the Bougainville Mining Act (notice to show cause why it should not be cancelled has already been given to BCL). We will then seek a new developer by inviting tenders using powers under our Mining Act.

That licence is BCL’s major asset. So cancellation would probably make all BCL shares almost worthless, including the 19.2% BCL equity PNG has held since 1972. Until now the ABG has been open to PNG retaining that equity. If Panguna re-opens, the National Government could then keep equity involvement. But if interference in ABG control of mining continues, we have no choice but to cancel the licence and completely end PNG involvement in Panguna.

That will not reduce landowner involvement in decisions about Panguna, or their sharing fairly in revenue, for the Bougainville Mining Act ensures their full involvement in both.

I await your response.

Yours sincerely,
John L. Momis
President, ARoB

1 Comment

Filed under Financial returns, Papua New Guinea