In 2014, the State borrowed US$120 million [K375 million] from BSP to buy a 15% stake in the proposed Solwara 1 seabed mine.
Nautilus Minerals says US$113 million from the loan was paid to the company in December 2014.
It is not clear what has happened to the other US$7 million, the balance of the funds borrowed, but at the moment the government’s investment in Solwara 1 is not looking like a very good bet.
The latest financial report from Eda Kopa (Solwara) Limited, which holds the State’s interest in Solwara 1, shows that while the company still owes K376.8 million to BSP, it is valuing its assets, the 15% stake in Solwara 1, at just K113.7 million.
As well as the K260 million write down in value, it is estimated the State is paying around K29 million a year to BSP in interest payments. This is calculated from the indicative interest rate of 7.75% shown in the financial report of Eda Kopa’s parent company, Kumul Minerals Holdings Limited.
So, not only has PNG already LOST K260 million on its investment in Solwara 1, it has also paid around K90 million in interest payments to BSP (2015-2017) and is still paying an additional estimated K29 million a year.
How many nurses, health centre workers or teachers could that money have paid for instead?
Looking deeper into the company records of Eda Kopa (Solwara), there are also some other interesting numbers lurking there.
In April 2014, Eda Kopa (Solwara) registered a charge in favour of BSP for up to K2.275 BILLION or US $875 million, (which ever is the higher).
In November 2014, a second charge was registered by Eda Kopa (Solwara). This time a cross charge with Nautilus Minerals in the sum of K10 BILLION.
Does anyone trust Eda Kopa (Solwara) to be playing around with such enormous potential liabilities?