Category Archives: Exploration

Govt Cuts All Exploration Investments After Nautilus Debacle

Minister should identify the individuals responsible for the decisions that have led to losses of over K375 million.

If there is zero culpability and zero transparency taxpayers can expect they will continue to get fleeced.

Post Courier | September 12, 2019

The government has put a blanket ban on exploration investments after it was dealt a major blow in losing K375 million in the very risky Solwara 1 project.

Its attempts to recoup some money, at least US$50.8 million (K172m) has been constrained so far as Solwara 1 joint venture partner Eda Kopa Limited (Kumul Minerals Holdings Limited subsidiary) had the claim disallowed by the British Columbia Supreme Court appointed monitor PricewaterhouseCoopers (PwC) Canada last month.

KMHL was seeking an unearned contribution claim during the Nautilus Plan of compromise and arrangement process catered for under the Canadian Companies’ Creditors Arrangement Act.

Minister for Public Enterprise and State Investment Sasindran Muthuvel in an interview with Post Courier has told Kumul Minerals and Kumul Petroleum to stop such exploration investments.

He said the deal started from the time of the previous government.

“They went through arbitration and in 2015 they decided to pay upfront US$120 million (K375 million) which was obtained purely as a loan and then we entered into this highly risky project,” Minister Muthuvel said.

“Now we stand to lose all of these monies… the Canadian Court in the process of the developer Nautilus Minerals sought creditor’s protection from (the) British Colombia court in Canada and they appointed PriceWaterHouseCoopers as their administrator.”

“We put our claim for US$50.8 million to retrieve some money back but unfortunately there is very little room or chance for us to get back any funds because they have exhausted all the funds.”

“We stand to lose this major funding which is really a major blow for us.”

Minister Muthuvel said that was a very tough lesson to learn as a Government not to enter into very risky investments.

“This has shown that not necessarily we as a government must embark into every exploration investment.

We should look at our tax regime, we should look at our royalty regimes whereby how we can generate some of the revenue of these tax regimes rather than insisting on equity, especially on this kind of scientific or research project where there is uncertainty to it.”

“To tell you the truth, from day one the project was carrying negative rate of returns, that means we knowing very well that this project is not going to yield any positive income, we knowingly agreed to go into this project with a negative investment or negative rate of returns, which is highly risky and it’s again guaranteed by State.”

Minister Muthuvel also revealed that the investment was not carried out in the books of Kumul Mineral.

“I am appealing to both Kumul Mineral and Kumul Petroleum to stop all kinds of exploration investment, to slow down, and to take stock of what we have and also to help government at this tough economic time.”

As of last week, September 5, according to PwC’s update on the process currently underway, Eda Kopa and the Nautilus Group have individually led applications for the September 10, 2019 Court hearing in Canada.

“Eda Kopa is seeking to set a schedule to have the validity of their claim (the “Eda Kopa Claim”) determined.

“The Nautilus Group is seeking to have the validity of the Eda Kopa Claim determined on September 10, 2019, or as soon as reasonably practical afterwards,” PwC Canada stated in its last update on the process.

Advertisements

1 Comment

Filed under Exploration, Financial returns

Another call for PNG to cancel sea bed mining licences

Radio New Zealand | 6 September 2019

The former governor of Papua New Guinea’s Madang province, Sir Arnold Amet, has renewed his call for the government to cancel sea bed mining licenses.

This comes as Canadian miner Nautilus, in which the PNG government has a 15 percent stake, is fighting through the courts for its economic survival.

Sir Arnold said he feared that Nautilus, which had been close to beginning sea bed mining at its Solwara One site in the Bismarck Sea, could on sell its PNG licenses.

The James Marape government is backing the call made by Pacific Forum leaders for a 10 year moratorium on seabed mining, but Sir Arnold said it must go further.

“Our preference is, quite obviously, for cancellation of those licenses and a total ban until such time as science can truly satisfy us that that [seabed mining] is worthwhile and economically and environmentally sustainable project. At the moment there is no such evidence,” Sir Arnold said.

Leave a comment

Filed under Environmental impact, Exploration, Mine construction, Papua New Guinea

Failed Nautilus CEO resurfaces in Bougainville

Kalia Limited’s new Director Corporate Development and Strategy, Michael Johnston, jumped ship as Nautilus sunk, leaving PNG tax payers $120 million poorer

Having duped the PNG government out of K375  million the former CEO of bankrupt Nautilus Minerals has joined another debt heavy exploration company, this time hoping to strike gold on Bougainville 

Board moves boost Kalia Bougainville copper/gold play

Matt Birney | The West Australian | 25 July 2019

Bougainville Island focussed porphyry copper-gold exploration company, Kalia  Limited, has restructured its management ahead of a significant ramp-up in regional

The company has this week appointed two new directors with a wealth of resources sector experience, following the increased activity of private investment firm Tygola Pty Ltd, who continue to strongly support Kalia via a series of loan facilities, that amount to $6m.

Michael Johnston has joined the company as the Director Corporate Development and Strategy, bringing his extensive experience working in PNG and the wider Asia-Pacific region to the Board, particularly as General Manager of Placer Dome’s exploration team in Australia and Asia in the early 2000s.

More recently, Mr Johnston was the President and CEO of TSX-listed Nautilus Minerals, where he managed the development of the world’s first sea-floor mining company, whose main project was the Solwara 1 Field in the Bismarck Sea, in PNG waters, just northwest of Bougainville.

Kalia has also hired accountant Jonathan Reynolds as a non-executive director.

Mr Reynolds has more than 25 years’ experience across a range of sectors, including a current role as Finance Director with ASX-listed Allegiance Coal, a company focussed on investing in advanced or producing metallurgical coal assets.

Kalia recently sought out one of the world’s leading experts on porphyry, epithermal and “Carlin-style” copper-gold mineralisation, Dr Steve Garwin, to run the ruler over its comprehensive technical data set on Bougainville.

Dr Garwin has been involved in numerous exploration and mining projects, including the Batu Hijau porphyry mine in Indonesia that holds an ore reserve of 9 million ounces of gold and 4 million tonnes of copper.

His recent discovery of the world-class Alpala porphyry deposit in Ecuador is even better, holding about 11 million tonnes of copper and just over 23 million ounces of gold.

Dr Garwin’s review highlighted the geochemically “fertile” nature of the Mt Tore region’s rocks, holding significant potential for multiple copper-gold porphyry centres and epithermal mineralisation, which confirmed Kalia’s belief that it is sitting on some prospective ground on Bougainville.

The investigation unearthed five significant regions of interest on the company’s tenements, including a new unexplored target 60 square kilometres in size, characterised by anomalous copper-gold assays in geochemical stream sediment samples dating back 30 years.

The exploratory overview of the company’s two tenements located at the northern tip of Bougainville also delineated three potential porphyry copper-gold centres and one substantial epithermal gold region bridging the Teosiri – Teoveane areas, for follow-up exploratory field work.

The regional exploration to ground-check the interpreted geological features will be helicopter-supported, given the challenging terrain and the remote locations of individual targets.

Kalia said it would focus its field sampling programs around the key locations, to identify and rank targets for maiden drilling programs in the project holdings, expected to kick off later this year.

The company completed a detailed airborne geophysical survey over its Mt Tore leases in 2018, which threw up 64 individual porphyry and epithermal exploration targets for evaluation.

The style of porphyry copper-gold deposits the company is seeking on Bougainville are highly sought-after globally because they boast some of the largest ore reserves of these desirable commodities.

And it couldn’t reside in a better postcode globally, with Kalia exploring in the “Pacific Ring of Fire” region, which holds many world-class copper-gold porphyry systems and its Mt Tore JV tenements located only 130km northwest of one of them, the gigantic mothballed Panguna copper-gold mine.

Watch this space for developments.

1 Comment

Filed under Bougainville, Exploration

Wafi-Golpu Delays Exploration

Nancy Kalimda | Post Courier | July 18, 2019

Wafi-Golpu Joint Venture is delaying its advanced exploration activities over uncertainty in attaining a mining permit.

As the exploration activities are being delayed, the number of employees is also being reduced in a redundancy exercise.

This comes amid the current legal challenge over the signing of the memorandum of understanding (MoU) between WGJV and the State.

As per the project permitting timeline WGJV expected to get a Special Mining Lease (SML) in June as planned and agreed to by WGJV and the State.

“Due to the failure to achieve the targeted milestones for permitting the project, and uncertainty related to the project permitting timeline, WGJV has delayed its planned advanced exploration activities until after the grant of the SML, when these activities were originally scheduled.

“Currently, there are 57 WGJV employees that have been identified for reduction in July, August and September 2019,” WGJV said.

WGJV said normal activities at the site, including general operation of the site, community programs, environmental monitoring and engineering activity are continuing.

WGJV was responding to questions regarding the progress of the project and the court injunction over the signing of the MoU.

“As the matter is before the courts, we note the national government has lodged an appeal against the stay order.

While waiting for the case to be heard, the WGJV is complying with the stay order and will not undertake activities or work (including meetings with government agencies and other stakeholders) which will alter the status quo in relation to the MoU,” WGJV said.

WGJV emphasised that the MoU is between the WGJV and the State.

The company said under PNG law, all matters relating to Morobe Province and the landowners are dealt with via separate negotiation and consultation process, including the Development Forum and memorandum of agreement process.

It said the MoU does not replace that process or any of the usual agreements that will need to be negotiated before any SML is granted. These include:

  • The Mining Development Contract (which outlines the fiscal and regulatory arrangements for the project);
  • The MoA (which is an outcome of the Development Forum and deals with the distribution of benefits from the project);
  • State Equity Acquisition Agreement (which is the purchase agreement for the equity to be acquired under the State’s option); and
  • Fiscal Stability Agreement (which is an agreement providing long term fiscal stability for the project).

Leave a comment

Filed under Exploration, Mine construction, Papua New Guinea

Geopacific stitches up Woodlark gold project in PNG

The colonisers eye up their pot of gold

Matt Birney | Company Advertorial | The West Australian | 26 June 2019

Geopacific Resources has acquired 100% direct ownership of the flagship Woodlark gold project in Papua New Guinea, buying out fellow Australian Kula Gold’s remaining share in a cash and scrip transaction worth about $3.29m.

Kula will immediately utilise the cash component to repay a loan totalling about $0.72m to Geopacific.

The deal seems like exquisite timing for the company, with the gold price nearly 25% higher than that assumed in November’s definitive feasibility study for Woodlark, which already outlined robust economic metrics and strong margins to develop the project.

Additionally, full ownership streamlines the corporate structure with significant administrative cost reductions and importantly reduces the risk to external financiers, willing to fund the project’s start-up.

Geopacific Managing Director Ron Heeks said: “Moving to 100% ownership of the 1.6Moz Woodlark gold project is a major milestone for the company. Full ownership simplifies project financing discussions and further enhances the company’s attractiveness and general market appeal … (with) additional benefits … (including) a substantial reduction in corporate costs.”

“The timing of the transaction coincides with the near completion of project finance due diligence and a strengthening gold price that is well above the DFS pricing assumption of AUD$1,650/oz. Progression in these work streams alongside the increasing gold price is a positive step in taking advantage of the increasing margin.”

The company is now racing down the final lap with baton in hand and is currently in the closing stages of an Independent Technical Experts, or “ITE”, review of the gold project, with representatives attending a site visit to Woodlark Island this week.

Back in January, the ITE review was commissioned by a consortium of banks and non-bank lenders, after an indicative non-binding term sheet was received.

Perth-based SRK Consulting was appointed as the lead ITE to review the technical aspects of the Woodlark project on behalf of the group of potential lenders.

SRK completed an initial Fatal Flaws Review late in 2018, with none being identified for the project.

With the gold price only strengthening since, the free cash flow position of the proposed initial 13-year mine life project has ballooned with Mr Heeks saying in January: “Every AUD$10 (per ounce) increase in the gold price is an additional ~AUD$10m in revenue which is considerable upside for the +1Moz project …”

November’s DFS study optimised the project at AUD$1,650 per ounce and produced a pre-tax free cash flow of $424m.

Geopacific recently received indicative costs to build the proposed gold processing plant on Woodlark Island from three international standard contractors.

The company said that an initial review of those costs showed that the pricing is in line with the DFS parameters completed last year by Lycopodium.

Total capital establishment costs for the Woodlark gold project come in at just under $200m, with a third of those monies required to construct the processing plant, which is very respectable considering the relatively isolated overseas location.

With respect to the near completion of the ITE review of Woodlark, Mr Heeks added: “The ITE review is progressing well and Geopacific is confident with the technical aspects of the DFS completed by industry-leaders Lycopodium, Mining Plus and MPR Geological.”

“The results from the initial ITE fatals flaws review (built) confidence in the Woodlark project in addition to the conservative approach undertaken in calculating the (mineral) resource. The resource estimate uses a fully diluted resource model with a significant dilution factor.”

“This provides additional comfort that mining at the estimated grade is achievable. The Woodlark deposit is a permitted project with robust economics that are improving with the current gold price ~AUD$350/oz higher than that used in DFS.”

Last month, the company appointed Ian Clyne as its new Chairman to actively drive financing arrangements for the gold project.

Mr Clyne has been part of the company’s board since 2016 and brings with him a wealth of corporate experience including most recently as Group CEO of Bank South Pacific Limited, based in PNG’s capital Port Moresby for five years.

It was a strategic move for Geopacific, with Mr Clyne being a strong advocate for PNG’s potential and its people and holding a high level of commitment to social and community issues within the mainly rural population of the developing country.

Commenting at the time, Mr Clyne said: “As the Chairman of Geopacific, my priority is to drive the Woodlark gold project towards a successful project finance outcome that will maximise shareholder and stakeholder value and returns.”

“Woodlark Island is one of the most prospective regions of PNG and we take great pride in our positive relationships with the local community, the National & Provincial Governments, and the regulatory authorities who have also demonstrated strong levels of support for the permitted … project.”

The Woodlark project holds an ore reserve of nearly 29 million tonnes grading 1.12g/t gold for 1.04 million ounces, contained within a broader JORC-compliant mineral resource estimated at 1.57 million gold ounces.

This gold resource is also likely to build over time as the project has extensive gold and copper exploration potential, in a region where Geopacific holds the dominant land position on the 912 square kilometre area of Woodlark Island.

Once in production, the company will likely be able to self-fund and potentially sustain its mining operations at the Woodlark gold project to beyond the initial 13-year mine life.

The project area is blessed with flat terrain and soft outcropping ores with average metallurgical gold recoveries exceeding 90% during the first five years of production.

All permitting is granted and the project enjoys strong community support in the proven mining investment hub of PNG.

With full ownership of the exciting project within its grasp, the gold price behaving itself and a new Chairman at the helm, Geopacific now has clear air ahead towards the construction, development and ultimately gold production at the impressive and undervalued Woodlark project.

1 Comment

Filed under Exploration, Financial returns, Mine construction

Drop In Mineral Exploration ‘Threatens Mining Industry’

Mineral exploration in Papua New Guinea

Melisha Yafoi | Post Courier | June 19, 2019

The steady decline in exploration activities particularly mineral exploration is a grave concern for the mining industry [but really for nobody else!].

PNG Chamber of Mines and Petroleum president Gerea Aopi said yesterday that the sector has been depressed and it is of grave concern for the chamber and the industry.

Mr Aopi said the decline threatens the sustainability of the mining industry which has been the back bone of PNG’s economy for more than three decades, adding that exploration is the lifeblood of a vibrant resource sector.

While commenting on this, he said they want to work more closely with the government on the revised Mining Act as it is an important policy that has taken more than a decade to complete.

Mr Aopi said the industry is concerned that some of the changes that have been proposed will have severe negative impacts on the immediate and long-term both existing and proposed projects, to the detriment of PNG’s economy.

“It is important that fiscal and regulatory settings achieve a balance between the expectations of the people, good governance of the nation’s mineral wealth, and the requirements for attracting long-term investments.

“A sound legislative framework provides for a fair distribution of returns between the developer and the state, security of tenure to its investors, and stability of investment terms,” he said.

Mr Aopi said recently the chamber and the mining industry together have contributed to the review currently being undertaken by the government on the country’s Mining (safety) Act and regulations.

“We are fully supportive of this process and are happy with the close collaboration we are having with the government on this review process.

Having an up to date regulation that ultimately promotes the safety of our mine workers and our operation is paramount,” he said.

“We are also ready to support the government’s vision to establish a petroleum resources authority. “We’ve stated publically that industry’s position on many occasions and our position remain steadfast.”

Mr Aopi said the establishment of a strong, robust and efficient regulator that is financially autonomous will have the capacity to promote increased oil and gas exploration and assist the government in regulating petroleum industry activities.

Leave a comment

Filed under Exploration, Papua New Guinea

NZ Māori disappointed ancestral land up for tender for oil and gas drilling in Taranaki

Land covering 2200 square kilometres around Mt Taranaki has been put up for tender for oil and gas drilling. Photo: RNZ / Rebekah Parsons-King

Leigh-Marama McLachlan | Radio New Zealand | 5 May 2019 

Iwi in Taranaki are upset the government has put their ancestral land up for oil and gas drilling.

The latest block offer, announced this week, covers 2200 square kilometres of land around Mt Taranaki.

Ngāti Ruanui chief executive Debbie Ngarewa-Packer said it stirred a feeling of anxiety they know too well.

“The whole community is caught up on what happens if they come. What happens if they are irresponsible around our wāhi tapu?

“What happens if they ruin our whenua and then go off when they have found nothing and dug holes everywhere?

“A community with uncertainty can’t reach its full potential.”

This is the first block offer for this government and comes after last year’s announcement it would ban new oil and gas exploration out at sea – but not onshore.

This week’s offer excluded conservation land and cultural sites like Maunga Taranaki and Parihaka.

But Ngāruahine iwi leader Daisy Noble said it was still unacceptable.

“It should have been a stake in the ground: There is not going to be any more offers,” she said.

“They went for a bob each way and we are sick and tired of these sorts of attitudes.”

In the South Taranaki town of Patea, 53 percent of the adults earn less than $20,000 a year.

Ngāruahine recently settled its treaty claims for $67.5 million dollars but Ms Noble said oil exploration was holding them back.

“The opportunities that exist for us at home, near my hapū, is about our whenua. By the time it comes back to us, all the goodness of it is gone. It’s already taken out.

“How do we develop our whenua when you have already taken the best part away?”

Former Green Party candidate for Te Tai Hauāuru, Jack McDonald, is gutted with the offer, which covers his own tribal lands.

“It is a slap in the face that this so-called progressive government, which is meant to be taking a new approach to climate change and a new approach to Māori-Crown relations, would actually continue with this approach.”

The government aims to reduce New Zealand’s emissions to net zero by 2050.

Te Tai Hauāuru MP Adrian Rurawhe said he understood their concerns.

“I sympathise with them but until we can transition to a low emissions economy, we are basically going to have to live with the situation we are in.”

The tender closes 28 August. In a new move, companies must engage with iwi if they want to explore within 200 metres of a sacred site or waterway.

But Ms Ngarewa-Packer said under the Resource Management Act and in agreements they formed with the companies, their area of influence extended to 500m.

“But for us, some companies could sit there and say, ‘Oh we are going to default to the Crown process, versus yours.’ So to a large degree, it falls shy off the expectations we have on the company.”

She said without the power to veto, iwi ended up in costly legal fights.

Last year, Ngāti Ruanui won a lengthy battle to stop seabed mining off the coast of Patea. It is one of many legal challenges the iwi has pursued.

Ms Ngarewa-Packer said it took a toll and all of that pressure came back each time a block offer was announced.

Leave a comment

Filed under Environmental impact, Exploration, Human rights, New Zealand