The Bastardization of the Frieda Project by Pan Aust Ltd

frieda exploration

US$50million  Settlement Over Due Since Nov-2015

Gabriel Ramoi LLB | PNG Blogs

On the 30th of August  2013 a deed of settlement was entered into between Pan Aust Ltd and Xstrata-Glencore Mining  for the sale of EL 56 covering the Nena -Frieda Deposit. On the signing of the Deed, US$25m exchanged hands between the two with US$50m now Due and outstanding since November 2015.

The payment of the additional US$50m rides on the back of Pan Aust obtaining approval from  the PNG Government to proceed with its Bastardized Version of the original Mine Development Concept first proposed by Xstrata Mining to the  PNG Government in 2012.

In 2012 Xstrata Mining Ltd proposed to develop the world class Frieda Mine with a Capital Expenditure Budget of US$5.4 Billion which consist of the plan to develop a fully integrated open cut copper  mine with a potential life  of 40 years with a 68 MW Hydro Power Plant costing US$800m . It also Proposed a Tailings Dam to mitigate against the contamination of the Fragile Sepik River Eco System and was considering the option of building a 300km Road link from the mine to the coast at Aitape jointly with the State for the export of Copper as opposed to the strongly contested option of barging copper down the Sepik River System.

Since taking over the Frieda Exploration License, Pan Aus Ltd has been selling a revised Bastardized version of this Mine Development Plan by sponsoring a campaign to take short cuts in the development of the Frieda Mine by reducing  Capital Expenditure from US$5. 4 Billion to US$1.2 Billion with a plan concentrated on taking the Gold first out of the Mine to finance the rest of the mine Development cost.

For Power Pan Aust Ltd Proposed a Diesel Generation set which will be barged up the Sepik River on a pontoon and anchored on the Frieda river to supply Power to the mine. Over the last year Pan Aust has also carried out a concerted campaign to get villages on the Banks of the Sepik River to accept their proposal to barge copper concentrate down the Sepik River System despite the total rejection of this plan by the entire Sepik Community. To date I have yet to read any environmental impact statement by Pan Aust on Frieda and in Particular its comments on Mine Tailings or its plans on the construction of a mines tailing Dam.

Building of Mines in PNG is more then just profits for shareholders. It is about opening up new opportunities and access to services by communities which but for the mine will remain unconnected to the rest of the country. It is about long term contribution in revenue streams to Provincial and Local Government Budgets. It is about building long term infrastructure that will survive long after the life of the mine. It is why the building of a road link from Frieda to Aitape must be the central piece of infrastructure that the Sepik Community and its leaders must insist from the mine developer. Frieda must add value to the two Sepik Provinces not take value and self respect out of us by buying out our leaders and compromising the integrity of the project.

My plea to Governor Amkat Mai and Governor Somare is to leave our Gold and copper in the Ground if the cost of taking it out would only cost hardship and misery to our People and the environment and by all indication Pan Aust ltd as the Potential Developer of the Frieda Mine is not the type of company and Developer with the resources to Develop a word class mine.

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Bougainville could build small gold refinery


Radio New Zealand | 9.02.2016

The financially struggling Papua New Guinea autonomous region of Bougainville is considering building a gold refinery.

The president John Momis said they wanted to tap into the informal but lucrative alluvial gold mining industry that thousands of Bougainvilleans rely on for income.

Mostly done in the tailings of the long shut Panguna mine, alluvial mining is dangerous, not least the miners’ use of mercury to extract the gold.

Mr Momis said the ABG wanted to control and profit from the sector.

“Including perhaps setting up a small refinery so we can entice the alluvial gold miners to sell to us rather than selling to outsiders through Solomon Islands or even PNG, different ports, and paying nothing, no tax all to the ABG.”

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More mining for PNG

Future of K92 mine looks promising [for foreign profiteers]

Post Courier | 08.02.2016

THE future of Kainantu Mine in Eastern Highlands Province now looks promising with developer K92 Holdings International Limited eventually securing a funds for the project.

Otterburn Resources Corp, last Friday, announced its subsidiary K92 entering into financing agreements with CRH Funding II Pte. Ltd. (CRH), an affiliate of Cartesian Royalty Holdings and Cartesian Capital Group.

K92 CEO Ian Stalker said progress of Financing are expected to be used to refurbish and bring Irumafimpa, one of the gold-copper deposits of the Kainantu Gold Project, back into production in 2016.

“Kainantu Gold Project is an attractive gold mine restart project with existing infrastructure in place and is coupled with almost 400sqkm of adjacent prospective exploration properties.

“We have now attracted a supportive financial partner to assist us in our restart,” he said. After extensive due diligence including time on site, Cartesian has decided to move forward with K92 as we advance this very unique opportunity.

The financing has been structured in a way that is less dilative to the K92 share structure than a traditional equity investment, and involves the prepayment of gold, based on a percentage of our production from Irumafimpa.

This agreement entered consists of a gold prepayment investment and an equity investment.

Under the gold prepayment agreement (GPA), CRH has committed to provide K92 with up to US$4.8 million over four (4) tranches in exchange for a percentage of gold produced at Irumafimpa over a 36 month period, subject to a minimum of 18,000 ounces of gold and a maximum of 20,000 ounces of gold.

CRH has advanced K92 the first tranche of US$962,795 under the GPA.

The remaining tranches will be advanced upon K92 fulfilling certain technical milestones and other conditions, including the initiation by February 29, 2016 of the previously announced reverse take-over transaction with Otterburn (RTO).

In addition to the advances under the GPA, CRH has committed to an equity investment of up to CDN$3.5 million.

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Brazil police may accuse Samarco execs of homicide in dam burst: Folha

It is a shame authorities in PNG can’t take a similar tough approach on the destruction caused by the mining industry. How many people have died in Western Province, Bougainville and Porgera with no accountability…

A rescue worker walks between destroyed houses after the dam disaster in Brazil.

A rescue worker walks between destroyed houses after the dam disaster in Brazil.

Roberto Samora| Reuters | 5.02.2016

Brazilian police have enough evidence to accuse executives of miner Samarco Mineração SA with homicide over a deadly dam burst in November, a police chief told newspaper Folha de Sao Paulo on Friday.

Police earlier raided the offices of Samarco, a joint venture of Vale SA and BHP Billiton, in Belo Horizonte, the capital of Minas Gerais state, and in Mariana, where the iron pellets venture is located.

“We have all the autopsy reports. … The crime of homicide occurred, we will decide if it was voluntary or involuntary,” police chief Rodrigo Bustamente said, according to Folha.

Bustamente could not be reached immediately for comment.

Samarco did not respond immediately to a request for comment on the possibility of homicide charges. Earlier, in a statement in which Samarco reported the raid on its offices, the company said in it had collaborated with police since investigations began into the cause of the tragedy that left at least 17 dead and 800 homeless.

Mud surging from the dam devastated an entire neighborhood in Mariana and contaminated a river that supplies fresh water to a large area in Minas Gerais and the neighboring state of Esprit Santo. The tragedy is considered Brazil’s worst-ever environmental disaster.

State civil police could not be reached for comment on the potential homicide accusations. Only prosecutors can formally present criminal charges in Brazil.

The report of the police raid of the Samarco offices occurred a day after Minas Gerais state said the dam burst caused losses to municipalities estimated at 1.2 billion reais ($303 million), not considering environmental problems. The federal government is seeking up to 20 billion reais in indemnities.

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Harmony in a spot over Hidden Valley

Peter Steenkamp. Picture: RUSSELL ROBERTS

Peter Steenkamp. Picture: RUSSELL ROBERTS

Allan Seccombe| BD live | 6.02.2016

HARMONY Gold, which expects to be debt-free at the end of this year, has run into a conundrum at its Hidden Valley mine in Papua New Guinea, and it may be the first tough decision for new CEO Peter Steenkamp.

Harmony shares the Hidden Valley mine with Australia’s largest gold miner, Newcrest Mining, and the partners have grappled for years to make the mine a sustainably profitable gold and silver producer since it opened in September 2010.

Now, it appears Newcrest has reached the end of its patience after it appointed Sandeep Biswas its new CEO in 2014 to head a programme of restructuring and appease shareholders angry about multiple production downgrades by focusing on generating cash and running a more operationally disciplined firm.

One of the mines that came under scrutiny was Hidden Valley, a marginal mine, difficult to access and which has run into safety issues that have led to long shutdowns. Harmony impaired the mine by R2.1bn last year.

While Newcrest may want to sell or close the mine, it will remain a partner with Harmony on the undeveloped Golpu project, which will deliver a copper and gold mine in Papua New Guinea in coming years.

“They want to remain as long-term partners. The big issue is really about Hidden Valley. It’s had quite a bad run in the past few quarters and, at the current dollar gold price, it really is a marginal asset,” Mr Steenkamp said on Friday.

“Newcrest certainly is very excited about Golpu,” he said.

At the prevailing rand-gold price, Harmony would be debt-free by the end of December, said chief financial officer Frank Abbott. Harmony will release its Golpu feasibility study on February 15.

“The study will show that for the next two or three years, it is very fundable for Harmony, at Golpu and we probably wouldn’t need to incur any debt.

“After that, capital would ramp up and we would look at our options at that stage,” he said, adding there would be enough cash flow from the South African mines to fund dividends and early work at Golpu.

The partners are negotiating a pre-mining agreement for Golpu with the government and are understandably coy when it comes to saying exactly what their intentions are with Hidden Valley. As part of a review of the mine, which has enough ore exposed to continue mining this year, it will decide whether to invest $50m to push back the edges of the open cast mine and expose more material.

The other options include suspending the mine or selling it outright. Harmony is unlikely to want to take full ownership and mine it alone.

A decision will be made by end-June, the financial year-end for Harmony and it will mark the first major decision around Harmony’s assets for Mr Steenkamp, who has been in the CEO role for six weeks.

“We are looking at strategic options at Hidden Valley,” he said.

Mr Steenkamp has visited the mine in which all pre-stripping of waste material to expose ore has stopped until metal prices improve “significantly” and mining will focus on remaining cash flow neutral or, at best, positive.

“It’s probably one of the nicest mines I’ve ever visited. The pit conditions are fantastic; the fragmentation is great. The conveyors, the crushers and the plant are all working well, but the problem is that it’s a marginal ore body,” he said.

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Uncovering impacts of gold mining in Papua New Guinea

earth institute 1

EPS Faculty/Earth Institute Research Scientist Joshua Fisher and Professor Sarah Knuckey from the Columbia Law School work with a translator to explain the results of an independent environmental assessment during a community consultation in Papua New Guinea in December 2015.

Joshua Fisher | Earth Institute Columbia University | 08.02.2016

The pacific island of Papua New Guinea is one of the world’s most resource rich countries, hosting nearly 7 percent of global biodiversity and important reserves of gold, copper and hydrocarbons. However, despite a burgeoning resource economy, the country struggles to translate resource rents into development. One of the principal challenges that the country has faced has been in effectively governing the extractive industry sector, which historically has been a source of grievance and conflict for communities living near mine sites and is the focus of a 2015 United Nations Development Programme report.

This legacy continues, and from late December 2015 through January, a team of Earth Institute scientists and human rights lawyers from Columbia University worked in the highlands of Papua New Guinea to deliver the results of an independent study of water quality and human rights to the indigenous communities living near an industrial gold mine. The team was led by myself and Professor Sarah Knuckey from the Human Rights Law Clinic at Columbia Law School. Together with co-investigator Professor Tess Russo of Pennsylvania State University, our team has been working for two years to assess environmental quality and the human rights impacts of mining on local communities.

Many of the communities in Porgera, Papua New Guinea, experience episodic water insecurity, poor sanitary conditions and chronic poverty. These challenges are magnified by continual in-migration of people from surrounding areas seeking economic opportunities from small-scale gold mining, and from a scarcity of arable land for farming and other traditional livelihoods. In addition, there has been a legacy of human rights abuse and sexual violence at the mine site, and this has built a legacy of mistrust between communities and mine owners.

An erodible waste dump from the Porgera Joint venture gold mine. The red color is produced by liquid tailings that are released by the mine.

An erodible waste dump from the Porgera Joint venture gold mine. The red color is produced by liquid tailings that are released by the mine.

The Porgera Joint Venture (PJV) gold mine, majority-owned by Canadian mining company Barrick Gold and Chinese company Zijin, has brought benefits to local communities in the form of improved infrastructure and royalties. But residents have frequently raised concerns about abuses by security forces, as well as the mine’s impacts on their water, flora and fauna, air, and general livelihoods.

The mine has replaced once arable farmland with hard rock dumps and liquid tailings, which release contaminants directly into local rivers and creeks. Many of the traditional residents, as well as newer immigrants, frequently pan for gold in the rivers near the mine, including in the liquid tailings waste. However, these communities often report not having adequate information about the health risks associated with industrial waste.

Penn State Assistant Professor Tess Russo measuring alkalinity in a river near the mine in January.

Penn State Assistant Professor Tess Russo measuring alkalinity in a river near the mine in January.

In response to community requests for independent environmental assessment, the team designed a hybrid human rights/environmental assessment method, with funding from The Earth Institute and the Human Rights Clinic. In 2015, the Columbia team conducted interviews in each community near the mine to understand community concerns about the environment and identify how residents interact with potentially contaminated materials.

Penn State Assistant Professor Tess Russo and PhD student Beth Hoagland led the project’s hydrology and geochemistry investigation. Russo, Hoagland and I collected water and soil from across the valley and made measurements using mass spectrometry and acid digestion methods back at Penn State. Additional soil measurements were made by Professor Benjamin Bostick at the Lamont-Doherty Earth Observatory using X-Ray fluorescence analysis. After analyzing the samples for heavy metals, the team consulted public health researchers at the Columbia Mailman School of Public Health and at the Penn State Hershey College of Medicine to determine the potential implications of environmental contaminants for peoples’ health.

When we analyzed the samples, we found that major rivers near the mine have heavy metal concentrations above World Health Organization recommendations for safe drinking. In contrast, we did not find evidence that the rainwater people collect for drinking contains heavy metal contaminants, although it could be unsafe due to the generally poor sanitary conditions in villages.

The interdisciplinary team is now working to assess the implications of these and other findings for water security and human rights in the area.

In December 2015-January 2016, the team returned to each village to report the results of the environmental testing, using satellite imagery color-coded for water drinking quality, created with project partners Brad Samuels and McKenna Cole of SITU Research—an organization focused on spatial analysis and visualization for fact finding and reporting. In addition to these community consultations, the team collected additional water and soil samples in order to explore how metal contamination changes across the watershed.

The team met with a wide range of stakeholders on the issue of water in the valley to explore ideas and opportunities for improving water security. While in Papua New Guinea, the team also met with senior management from the mine and government officials to discuss the project.

By combining the environmental measurements with a legal analysis of the human right to water, the interdisciplinary team is working to assess whether that right is being fulfilled. Additionally, through stakeholder engagement with communities, government and company representatives, the team is exploring potential policy and governance changes that might be able to improve water security for the communities living near the mine.

The team will issue reports on the environmental assessment and right to water later this year, including recommendations to improve conditions around the mine. The team is also working with SITU Research to create an interactive online platform to share the results.

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The buck stops with Mr O’Neill on Bougainville

O'Neill and Momis pose

O’Neill and Momis (photo Tony Kaybing)

Bougainville Freedom Movement

On 12 January 2016, Papua New Guinea’s prime minister, Peter O’Neill, took on the portfolio of Bougainville Affairs in his latest cabinet reshuffle. Mr O’Neill says this is because the autonomous region is a top priority for the government as it heads towards a referendum on possible independence.

The Leader of the Opposition Don Polye queried the motive behind the Prime Minister Peter O’Neill giving himself the Bougainville Affairs Ministry in light of the looming vote on a referendum. Don Poyle then described the minor reshuffle as ‘self-serving and not in the best interest of the country.’

Then on 21 January 2016, Papua New Guinea opposition MP Sam Basil warned about the prime minister Peter O’Neill’s interest in the Panguna mine in Bougainville.

“Mr O’Neill last month (December 2015) met with the president of the autonomous Bougainville region, John Momis, over a reported government proposal to purchase 53% of Rio Tinto’s shares in Bougainville Copper Limited.
Mr Momis, whose administration has been in recent discussions with BCL about a possible re-opening of the mine, rejected the proposal. The prime minister has since denied that the government is interested in buying in on Panguna.”

But Mr Basil says Mr O’Neill’s latest move to appoint himself Minister for Bougainville Affairs is ominous.

“With his actions, in terms of dealing with other mines – Tolukuma and Ok Tedi – I think the people of Bougainville should be very wary of the prime minister’s actions, and they should be very careful on how they allow the prime minister to deal with their mine. So we should be very careful with Mr Peter O’Neill. He has lied to us many times.”

It is very interesting now that the President of Bougainville, John Momis doesn’t mind that Peter O’Neill is the Minister for Bougainville Affairs because “the advantage is that the buck stops with Mr O’Neill, so there can be no excuses”.

But O’Neill has already stopped the bucks.

On 29 December 2015, John Momis said many millions of dollars is owed to Bougainville as per the peace agreement concluded with PNG in 2001.

In a lengthy statement, Mr Momis says his government estimates that PNG has underpaid Bougainville for the recurrent unconditional grant and owes at least US$33 million dollars, which must be paid immediately.”

“The president says Bougainville is owed another US$207 million under the Restoration and Development Grant. Mr Momis says the national tax office is also failing to hand over taxes collected in Bougainville.”

Is the PNG Prime Minister Peter O’Neill and his government holding President John Momis and the people of Bougainville to ransom?

Are Rio Tinto and Bougainville Copper Limited (BCL) influencing the PNG Prime Minister?

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