Monthly Archives: July 2016

Hidden Valley mine unlikely to survive

Hidden Valley

The future looks bleak for the loss making Hidden Valley mine, which could be closed down within 12 months according to The Australian newspaper [see story below].

Hidden Valley is jointly owned by Newcrest and Harmony Gold.

The latest financial figures from Newcrest show production costs of $1,564 an ounce are outstripping the price of gold.

According to The Australian, Newcrest are “reviewing all strategic options in relation to the future “ and “without further investment in pre-stripping operations, the mine will halt in about 12 months”.

Related stories:

Dividends back at Newcrest despite weak quarter
Barry Fitzgerald | The Australian | July 26, 2016
Leading gold producer Newcrest is set to resume dividend payments after a three-year hiatus despite finishing off the 2016 financial year with a weak June quarter production report.
Underpinning the resumption of dividends expectation was Newcrest’s $US800 million or 27 per cent reduction in net debt in the June year to $US2.1bn, helped as it was by strong margins of more than $US400 an ounce.
The debt level is down from peak debt of $US4bn in 2013, the last time dividends were paid.
Analysts expect Newcrest to announce at least a US5c a share dividend when it releases its results next month. That is expected to be US10c a share for 2017 and as much as US40c a share in 2018.
The group’s June quarter production report, released yesterday, was disappointing across all operations, according to Credit Suisse mining analyst Michael Slifirski.
Gold production for the period of 598,037 ounces was below the 636,521 ounces in the preceding March quarter, and all-in sustaining costs rose by 9 per cent $US787 an ounce.
Production for the full year was marginally higher at 2.4 million ounces, just over the line to meet the group’s guidance for production of between 2.4 million to 2.6 million ounces.
Chief executive Sandeep Biswas said Newcrest had delivered a solid performance considering challenges at some sites.
“The 27 per cent reduction in net debt reflects our focus on cash generation,’’ he said.
Gosowong’s overall output was down from 38,865 ounces in the preceding March quarter to 17,644 ounces.
At the half-owned Hidden Valley mine in PNG, lower grade and lower treatment rates brought a production cost blow-out to $US1562 an ounce, up from $US542 an ounce in the preceding March quarter.
The partners are reviewing are “reviewing all strategic options in relation to the future’’ of Hidden Valley. Without further investment in pre-stripping operations, the mine will halt in about 12 months.
At the mainstay Cadia mine in NSW, production was down from 203,512 ounces in the preceding March quarter to 178,754 ounces. Premature failure of liners in a concentrator resulted in higher than normal downtime.
All-in costs continued to impress at $US394 an ounce.



Filed under Financial returns, Papua New Guinea

“Major statement” due on PNG mining and gas projects

panguna mine pit

Radio New Zealand | July 25, 2016

Papua New Guinea’s government is to meet this week for discussions on ownership of major mining and petroleum projects and shareholding in the country.

Among the shareholding items which Prime Minister Peter O’Neill says the National Executive Council will discuss is its involvement with Bougainville Copper Ltd.

Last month Rio Tinto gave away its majority shareholding in BCL to the Bougainville and PNG national governments, a move that angered Bougainville which had expected all the shares so it had control of the mine.

PNG’s government is also to discuss ownership of the Ok Tedi mine in Western Province.

The government had a 37% share in Ok Tedi when in 2013 it moved to take on a majority share by subsuming the 63% stake of the Sustainable Development Programme.

The move has been disputed by the SDP in a series of court actions.

However PNG Loop reports Mr O’Neill signalling an imminent statement this week about both situations, and issues related to shares in PNG’s LNG Project.

“I will be making a major statement after that (proposal) has been deliberated by the NEC,” he said.

“Let me say it again: This government wants to empower landowners to have rightful ownership of their resources. I will deliver to them before I go to the elections, this is my promise.”

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Filed under Financial returns, Papua New Guinea

Deep Sea Mining: An Invisible Land Grab

solwara mine

Sylvia Earle | National Geographic | July 21, 2016

Thousands of meters beneath the azure ocean waters in places like the South Pacific, down through a water column saturated with life and to the ocean floor carpeted in undiscovered ecosystems, machines the size of small buildings are poised to begin a campaign of wholesale destruction. I wish this assessment was hyperbole, but it is the reality we find ourselves in today.

A deep sea mining machine

A deep sea mining machine

After decades of being on the back burner owing to costs far outweighing benefits, deep sea mining is now emerging as a serious threat to the stability of ocean systems and processes that have yet to be understood well enough to sanction in good conscience their large-scale destruction.

Critical to evaluating what is at stake are technologies needed to access the deep sea. The mining company, Nautilus Minerals, has invested heavily in mining machinery. However, resources needed for independent scientific assessment at those depths are essentially non-existent.

The layout of a mining operation

The layout of a mining operation

China is investing heavily in submersibles, manned and robotic, that are able to at least provide superficial documentation of what is in the deep ocean. Imagine aliens with an appetite for minerals flying low over New York City taking photographs and occasional samples and using them to evaluate the relative importance of the streets and buildings with no capacity to understand (or interest) in the importance of Wall Street, the New York Times, Lincoln Center, Columbia University or even the role of taxi cabs and traffic signals. They might even wonder whether or not those little two-legged things running around would be useful for something.

The International Seabed Authority, located in Jamaica and created under the 1982 United Nations Convention on the Law of the Sea, is currently issuing permits for mining exploration. At the very least, might there be ways to issue something like “restraining orders” owing to the lack of proof that no harm will be done to systems critical to human needs? Or also at the very least protecting very (very, very) large areas where no mining will be allowed?

The role of life in the deep sea relating to the carbon cycle is vaguely understood, and the influence of the microbial systems (only recently discovered) and the diverse ecosystems in the water column and sea bed have yet to be thoughtfully analyzed. If a doctor could only see the skin of a patient, or sample what is underneath with tiny probes, how could internal functions be understood?

The rationale for exploiting minerals in the deep sea is based on their perceived current monetary value. The living systems that will be destroyed are perceived to have no monetary value. Will decisions about use of the natural world continue to be based on the financial advantage for a small number of people despite risks to systems that underpin planetary stability – systems that support human survival?

In the 1980s, when deep sea mining first became a hot topic, it seemed preposterous to think that humans could up-end planetary processes by burning fossil fuels, clear-cutting forests and oceans, producing exotic chemicals and materials and otherwise transforming – “taming” – the distillation of all preceding earth history for our immediate use.

A tragedy of the commons for the benefit of the few

A tragedy of the commons for the benefit of the few

Buried within the Deep Seabed Hard Mineral Resources Act of 1980, US legislation sponsored by Senator Lowell Weicker about deep sea mining, there is a provision that mandates for US interests to establish “Stable Reference Zones” of equal size and quality to those proposed for exploitation. The wording in this law was taken from a resolution crafted at the IUCN meeting in Ashkabad in 1978 that I helped draft and later took to Senator Weicker’s trusted scientific advisor, Robert Wicklund, for consideration.

The IUCN World Conservation Congress occurring this September in Hawaii provides a ripe opportunity to set in motion some significant and very timely actions that could help blunt the sharp edge of enthusiasm for carving up the deep ocean. Whatever it takes, there must be ways to elevate recognition of the critical importance of intact natural systems.

The environmental destruction caused by open mining on land is well documented

The environmental destruction caused by open mining on land is well documented

We need technologies to access the deep sea to independently explore and understand the nature of Earth’s largest living system. But most importantly, we need the will to challenge and change the attitudes, traditions and policies about the natural world that have driven us to burn through the assets as if there is no tomorrow.

This “as if” can be a reality – or not – depending on what we do now. Or what we fail to do. However, there is undeniably cause for hope: there is still time to choose.

This article was published originally on the Mission Blue website; reproduced here with permission.

National Geographic Society Explorer in Residence Dr. Sylvia A. Earle, called Her Deepness by the New Yorker and the New York Times, Living Legend by the Library of Congress, and first Hero for the Planet by Time Magazine, is an oceanographer, explorer, author and lecturer with experience as a field research scientist, government official, and director for corporate and non-profit organizations including the Kerr McGee Corporation, Dresser Industries, Oryx Energy, the Aspen Institute, the Conservation Fund, American Rivers, Mote Marine Laboratory, Duke University Marine Laboratory, Rutgers Institute for Marine Science, the Woods Hole Oceanographic Institution, National Marine Sanctuary Foundation, and Ocean Futures.

Formerly Chief Scientist of NOAA, Dr. Earle is the Founder of Deep Ocean Exploration and Research, Inc. (DOER), Founder of the Sylvia Earle Alliance (S.E.A.) / Mission Blue, Chair of the Advisory Council of the Harte Research Institute, inspiration for the Ocean in Google Earth, leader of the NGS Sustainable Seas Expeditions, and the subject of the 2014 Netflix film, Mission Blue. She has a B.S. degree from Florida State University, M.S. and PhD. from Duke University, 27 honorary degrees and has authored more than 200 scientific, technical and popular publications including 13 books (most recently Blue Hope in 2014), lectured in more than 90 countries, and appeared in hundreds of radio and television productions.


Filed under Environmental impact, Pacific region, Papua New Guinea

Ocean Floor Mining: The Next Terrible Thing

The sea floor, home to unknown riches of all kinds. Photo: NOAA

The sea floor, home to unknown riches of all kinds. Photo: NOAA

“The New Gold Rush” doesn’t sound so great for the oceans

Justin Housman | Surfer Magazine | July 21, 2016

Because we won’t be satisfied until the entire surface of the earth has been rendered in a never-ending pursuit to greedily dig up things that can be burned for fuel or hammered into profitable metals regardless of the consequences, humankind’s most adventurous profiteers have now set their sights on mining the depths of the sea floor for minerals and precious metals. This is one of the few zones of earth that scientists know very little about, full of strange creatures, unknown bacteria, and hydrothermal vents that may harbor the keys to how life on earth began.

But let’s dig it up anyway, say the mining companies.

Laughably, something called the International Seabed Authority, which is not at all a group from a Wes Anderson film and was in fact created by the U.N. to administer regulations on the international high seas, met recently in Jamaica to begin the laborious and years-long process of dreaming up a series of rules and environmental regulations to be ignored and thwarted by international mining conglomerates.

There’s plenty of metals like zinc, cobalt, and manganese down there, important for many industrial uses like the building blocks of the cell phone you’re reading this on. Most of those metals are near hydrothermal vents, which harbor some of the least-known ecosystems on the planet. Of course, there are also tons and tons of gold and silver and diamonds, carelessly scattered on the ocean floor by nature, far from the bank vaults in which it all rightfully belongs. National Geographic guesses that there could be as much as $150 trillion (with a “T”) worth of gold alone to suck up in giant vacuums.

Did I not yet mention the vacuums? One of the ways the mining companies would get at all their newfound riches would be to park giant ships on the surface and snake enormous tubes to the bottom of the ocean, sucking up whatever they feel like, but hopefully mostly gold and silver and diamonds. They’d also pilot little drone-like subs down to the bottom to strip mine the sea floor and bring little treasure holds of cargo to the surface.

As you might imagine, there are environmental concerns. Nobody knows how many hydrothermal vents there are, let alone how many mineral deposits are available, or what would happen to the sea floor under sustained mining, because scientists don’t know much about the bottom of the ocean yet. Nobody has any real idea of how the ocean would react to deep sea mining operations. Delicate processes of nature will certainly be affected. The water column will be altered, there will be massive sediment upheaval, tailings to dump, gases to vent, probably oil deposits to deal with, sulfuric acid pollution potential, oil and gas spills from ships, and probably dozens of other consequences that won’t be known until they’re already causing a problem. As Dr. Cindy Van Dover, director of the Duke University Marine Laboratory, told NPR affiliate KQED:

As we have learned the hard way more than once, the biosphere of Earth is interconnected – what happens in one place, affects what happens elsewhere. The seafloor seems so remote to us, yet so did the ozone layer. Humans have a tremendous capacity to modify the global environment, in ways we often don’t anticipate and in ways that are very detrimental to our quality of life.

There’s already a plan in place to begin mining a deep section of the ocean’s floor near Papua New Guinea as early as 2018. When the plans were made available to local villages that explained how the mining would proceed, and even though profits would be shared with the locals, the locals were not pleased and reacted by imploring with a marine biologist studying the area to help them attack the mining ships.

Nautilus, the company behind the Papua New Guinea plan, and a world leader in the race to dig up the sea floor, assures environmentalists that they’ve done the legwork to make sure all the mining is done with eco-friendliest practices—they swear. Which is a bit strange, since marine scientists still have so little idea about what is even on the sea floor to be affected. How would Nautilus even know how to begin mitigating that?

So far, vast areas of the South Pacific are the first zones targeted by Nautilus and other mining groups. These are areas of the ocean that are home to fragile reef systems, some of the finest surf on earth, and, likely not coincidentally, communities of locals who don’t have the means to fend off international corporations bent on resource extraction.

The mining industry doesn’t have a particularly shining history of leaving the land in better shape than when they found it. Sadly, it looks like the ocean may be about to suffer the same fate.


Filed under Environmental impact, Pacific region, Papua New Guinea

Alluvial Mining in Papua New Guinea

alluvial watut

Alluvial mining on the Watut river

Eric Schering

A great many Papua New Guineans are searching for ways to earn K300 per fortnight – approximately minimum wage.  The problem is very few jobs are available, especially in the private sector.  Many are scratching out a living as subsistence farmers, which doesn’t provide anywhere near the minimum wage.

With a far-too-high unemployment rate of 70%, income-producing jobs are few and far between.  Papua New Guineans are desperate for opportunities to work for a living wage so they can get past a life expectancy of 58 years.

Alluvial mining is one such opportunity.  Currently between 40,000 and 80,000 Papua New Guineans are putting in long hours under the tropical sun sloshing gravel around in gold pans to put bread on the table.  Some get two grams per day, some five, some more.  It’s good money at the current rate of K70 – K80 per gram.  Even two grams harvested per day will generate K1500 per fortnite.

The price of gold bottomed out at $US1050 per ounce in January of this year and is currently selling at approximately $1360/oz.  By the year 2020 (probably much sooner) gold will reach $2000/oz, 50% higher than present levels, which will yield greater value for the self-employed gold worker.   

The Mining Act of 1992 opened the door wide for Papua New Guineans, allowing them to engage in panning for gold without a license or permit.  All that’s required is getting off one’s duff, a gold pan, and a gallon or two of perspiration.   

Father John Momis is not a happy camper these days.  He’s angry that Rio Tinto decided to equally give the Autonomous Bouganville Government and the PNG government the remaining shares of Rio Tinto PNG.  He is unrealistically demanding that Rio Tinto engage in a costly cleanup project and then allocate significant funds to re-start Panguna mine.  The harsh realities of becoming (or aspiring to become) an independent nation include recognizing that major mining companies are not NGOs coming alongside a nation to help it develop.  They’re out to make a profit.  They are willing to invest time, energy and resources, but only if they are reasonably certain they will get a return on their outlay.    

alluvial miners at work

Alluvial miners at work on Bougainville

On the positive side, Father Momis can be grateful for the explosion of alluvial miners throughout the length and breadth of his island.  In fact, far too many boys and girls are skipping classes and instead helping out dad and mom in the streams and rivers panning for gold.  School officials in Bougainville complain that enrollment figures have dropped significantly because of school children assisting their parents in the modern day gold rush in ABG.

In the Bulolo district of Morobe Province thousands of alluvial miners are using mercury to isolate the gold they pan.  The PNG government needs to get on top of this quickly because mercury is a very toxic substance.  Far too many alluvial miners use their bare hands to handle the mercy.  They are unaware that use of mercury can lead to damage of the brain, kidneys or lungs and even death.  The PNG government needs to ban the sale and usage of mercury, the sooner the better.

In various parts of the country the Mineral Resource Authority is pro-actively conducting workshops to inform alluvial miners about the how-to’s of effective gold panning as well as the dangers of mercury usage.  Such workshops are well-received and appreciated by locals.  The ABG and the PNG government need to think creatively on how to strengthen the alluvial mining industry in PNG.  The K400 million from the alluvial industry is nothing to sneeze at.

Among nations of the world, PNG’s economy ranks around 150.  However, among gold producers, PNG is number 13.  Gold provides a sizeable chunk of PNG’s government revenues, for many years exceeding 50% of the budget.

Alluvial mining is a key factor for sustainable development in PNG.  Gold panning is much easier on the environment than the large scale mining done by the multi-national mining companies.   

Guangdong and PanAust are planning to develop a huge copper and gold mine on the Frieda River.  It’s about time.  For 40 years the Frieda mine has changed hands from one gold exploration company to another, with no one willing to take the financial risk and do the hard work of constructing the mine.

I’ve learned from a source on the ground in Ambunti that these two companies are planning to build a huge containment facility to contain the tailings.  I hope that’s the case.  Meanwhile, under the shadow of the Hunstein mountains in the Frieda area, many locals in villages such as Okisai and Blackwater and Hotmin continue to pan for gold.      

The Minister for Mining Byron Chan has stated that alluvial mining will double in the five years leading up to 2019.  He’s probably right.  He states:  “The alluvial resource is extensive, under-explored and nation-wide.”   It’s a wide open door!

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Filed under Financial returns, Papua New Guinea

Geopacific to take large stake in Woodlark gold mine

woodlark resource

The National aka The Loggers Times | July 20th, 2016
KULA Gold Limited has announced that the company and Geopacific Resources Limited have entered into an earn-in and joint venture binding term sheet on Woodlark Island gold project in Milne Bay. 
According to a market release, Geopacific has an option to fund A$18.65 million (K44 million) over three and half years to earn up to a 75 per cent corporate interest in the project company, Woodlark Mining Limited. 
Geopacific is targeting an increase in the Project Ore Reserves to 1.2m oz gold. 
Geopacific had provided Kula with a full funding option for Kula through to project production. 
Geopacific has international resource funds as major shareholders – Resource Capital Funds and Tembo Capital who have been supportive of Geopacific.
Kula chairman David Frecker said: “This transaction delivers independent funding and regional expertise to significantly enhance the economics of the project for the benefit of Kula shareholders. Geopacific aims to undertake exploration drilling programmes to increase gold resources and reserves, and to provide the funding capability to move the Project through to production.” 
According to Kula, this transaction provided a clear path to production with a substantial investment which would benefit the Government, Mineral Resources Authority, provincial government, local level government and Woodlark Island landowners.
“The expectation is that the project will develop into a valuable long life operating gold mine for the benefit of all shareholders and other stakeholders.” 

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Filed under Exploration, Financial returns, Mine construction

Bougainville MPs silence over Rio Tinto shares irking local people


MPs urged to protect interests

Anthony Kaybing | Post Courier

The four Bougainville National MPs have been urged to support the Autonomous Bougainville Government’s stand in acquiring the 17.4 per cent Bougainville Copper Limited’s stake given to the National Government by Rio Tinto.
The four MPs have remained passive throughout the squabbling over Rio Tinto divesting its 53.8 per cent shares in BCL in the defunct Panguna Mine.
The deafening silence by the National MPs has irked a lot of Bougainvilleans who believe the Autonomous Region’s national representatives should be proactive in protecting Bougainville interests.
ABG Mining Minister, Robin Wilson has offered a subtle approach by proposing a meeting with the four national MPs by asking them to support the transfer of the shares and to make their case in Parliament and the National Executive Council.
“Similarly I propose that the members of the Bougainville Executive Council work with the Regional Member, Joe Lera who is the Minister for Bougainville Affairs to persuade the National Government and the Prime Minister to ensure that the 17.4 per cent is transferred to us,” Mr Wilson said.
The action by Rio Tinto has also prompted legal ramifications in the Bougainville Mining Act which brings sections 112(1) and 284(1) into operation.
These sections stipulate that if there are dealings in more than 25 per cent of the shares of a company holding an exploration licence then the ABG’s Secretary for the Department of Mineral and Energy Resources must issue the company a notice to show cause.

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Filed under Financial returns, Papua New Guinea