Category Archives: Financial returns

Tuke, Yama Want Fresh Deal For Ramu Mine

Politician’s love to make fancy promises – but do they ever actually deliver?

Post Courier | March 19, 2019

MINING Minister Johnson Tuke has said, before he signs any documents regarding the Ramu NiCo project, he needs to understand what is there for the landowners.

“When I understand and am really convinced then I will sign the agreement for the expansion, otherwise that will not happen,” Mr Tuke said.

He said he had discussed with Prime Minister Peter O’Neill the licence that government will issue for the expansion must be under a new agreement.

Mr Tuke said many mining companies usually say they will only give according to the MoA, however, there must be some form of kindness and humility when dealing with the local landowners whose land and water were given away for the project.

Madang Governor Peter Yama said the new expansion plan for the Ramu project will be properly discussed and he, as the head of the province, must be convinced that the people of Madang receive more benefits.

He said the old agreement that was signed before the construction and the operation of the Ramu Nickel Project must be done away with.

“The new agreement will be renegotiated, and the old agreement will be no more,”

He said that the Prime Minister Peter O’Neill during his visit to Usino had publicly announced that the new agreement will be a fresh start. Mr Yama said he is in full support of a new agreement for the Ramu NiCo Project, and stressed that all the parties that will be signing the agreement including the National Government, the provincial government, and the developer Ramu NiCo (MCC) must make sure the agreement provides better benefits to the people of Madang.

This is particularly for those from the impacted communities, the developer Ramu NiCo, Madang province, and the country.

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Kingston seeks to reboot gold mining on Misima Island

Work on Misima. Source: Kingston Resources

Sarah Byrne | Business Advantage | 18 March 2019

Drilling new targets and locating starter pits are the key focus for junior miner Kingston Resources, as it seeks to revive gold mining on Papua New Guinea’s Misima Island. Managing Director Andrew Corbett reveals the company’s plans to Business Advantage PNG.

With positive drill results to date, Kingston Resources Managing Director Andrew Corbett is confident further exploration will lead to finding new gold resources on Misima Island in Louisiade Archipelago, Milne Bay Province.

‘This year is about following up on the targets we identified through our successful geochemical exploration program in 2018. Identifying near-surface ounces at these targets will allow us to recover capital expenditure, reduce the pay back period and therefore, decrease risk.’

The company is ramping up exploration and plans to drill a range of targets across at least four areas within a few kilometres of the original Misima open pit mine, which operated between 1989 and 2004.

‘We aren’t looking to extend the current resource, we are locating new targets in areas with no previous exploration,’ he says.

Locating starter pits will be the key to reviving the project, according to Corbett.

‘We are ramping up exploration and from what we’ve seen so far, there is great potential at Misima, which is exciting for the team.’

Funding

Kingston’s interest in Misima is driven by the project’s potential to become a large, long-life project, which Corbett says is rare for a junior company.

Juniors have great capacity to take risks by developing new and interesting projects that larger, more risk-averse companies don’t pursue, he adds.

While confident in the outlook for mining projects in Papua New Guinea, Corbett says access to funding is always a focus.

‘At the moment, a lot of the activity is coming from the major players, and it can be difficult for juniors to secure funding.’

In a bid to lessen its need for external funding, the company’s Livingstone project in Western Australia is seen as a potential funding source for Misima.

‘We are continuing to advance Livingstone, this has always been seen as a great option to help fund Misima, through either cash flow or selling it if needs be,’ he says.

‘Funding will always be a challenge, but we are in good stead with having the Livingstone asset and a significant resource base at Misima.’

‘If we continue to deliver operationally, the funding will follow.’

Community support

Corbett says operating in Papua New Guinea has generally been a positive experience, with great support from the Mineral Resources Authority, other regulatory groups and the local community.

‘One of the most important things for us is the support we’ve received, particularly from the local community.

‘We do our best to listen to and work with the community and offer employment where possible because these relationships are key.’

Bright future

As exploration at Misima continues to advance, Corbett says instability around industry regulations is a worry for the company.

‘If the rules change, it is difficult for everyone, from the major players right down to the junior miners.’

As the mining industry in Papua New Guinea continues to strengthen, Corbett says Misima remains a great opportunity for Kingston.

‘I’ve great confidence in mining in Papua New Guinea, with the outlook for gold, copper and nickel in great shape,’ he says.

With the Wafi-Golpu project looking set to get the green light this year, and a number of other projects going ahead or looking to expand, Corbett says things are looking good for the sector.

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K92 mine dealing with new commitments in review of agreement

Clarissa Moi | The National aka The Loggers Times | March 14, 2019

THE review of the memorandum of agreement (Moa) between parties to the K92 mining project in Eastern Highlands is expected to be completed by the end of this year, says chief executive and director John Lewins.
He said all the parties wanted a new Moa so the review would include new commitments.
“We’ve had very good support from the Mineral Resource Authority (MRA) in moving to completing the review,” Lewins said.
“At this point in time, we are certainly confident that we will be able to sign an updated memorandum of agreement by the end of this year.”
The agreement was last reviewed and signed between the parties and former operator Barrick (PNG) over 10 years ago.
K92 Mining Inc is the new party.
The other parties are the Bilimoia Interim Landowners Association (Bila), National Government, Eastern Highlands government and affected local level governments.
Mining Minister Johnson Tuke said the ministry had prioritised review of the Moa and anticipated to recommence review by end of this month.
“Memorandum of agreement is the most important vehicle,” he said.
“That is an agreement between the industry and the State.
“Many a time, government as well as industry are passing the buck at each other.
“And who are the recipients? The people. We need to have in place a vetting process.
“I want see many of our memorandums-of-agreements to be captured.
“That has not been captured many times.”
Tuke said those Moas had to be vetted, fully captured and fulfilled by parties.
Meanwhile, Lewins said the memorandum of agreement recognises two landowner groups of the project:

  • Bilimoian landowners – mining lease (ML) 150; and
  • associated infrastructure groups (ownership of areas where mine infrastructure is built- lease for mining purpose (LMP) 78, ME 80 & 81).

Lewins said as part of their focus for this year, they had:

  • established a number of joint-ventures with the community for transport, security, camp and ancillary mobile plan;
  • introduced scholarship programmes for the 2018 academic year for 11 students being expanded this year;
  • a number of other projects like water supply and others; and
  • A big focus on training and employment programmes.

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K92 Mine An Ideal Project

Matthew Vari | Post Courier | March 13, 2019

Kainantu Mine has been a medium sized underground mining project that is not one to hit the headlines in the country.

This project, however, has been described as a mining developer’s dream project, when it comes to developing mines in the country’s vast and hard to reach mineral resource deposits.

K92 Mining CEO John Lewins made the comments following the announcement of the company’s Kainantu Gold mine expansion plans.

“It is from our perspective about as good a place in PNG where you can find a mine.

“It’s got all of the elements that we are looking for in a mine. It has got fantastic geology.

“It has got a very supportive Member; we have got a sealed road that comes up from the port of Lae up the Markham valley, right up to 6 kilometres from the mine.

“We have got grid power from PNG Power from the Yonki Dam, we have got an airstrip right next to it.

“All of the elements that you could possibly want for a mine have all come together in Kainantu.”

He made reference to the history of the mine and the lack of faith put into it by previous operators was indeed a blessing for the K92.

“One thing that it missed we think was somebody who believed in that mine, saw the opportunity in that mine and committed to bring that to the fore,” Mr Lewins said.

The mined was first discovered in 1992 and the construction of the mine started in 2004 to 2005 and commissioned 2006 and 2007.

Previous owners, Highlands Pacific, then sold it to Barrick in 2007 and after a short period of operation Barrick then placed the mine on care and maintenance in early 2009.

“So the mine had never actually achieved its designed production before it was put on care and maintenance.”

“6 or 7 years after it was put on care and maintenance, we acquired the mine from Barrick and we refurbished the plant and rehabilitated the underground and spend about K200 million on the refurbishment and rehabilitation underground and we commenced mining operations on the Irumaphimpa deposit in early 2017″.

Lewins thanked all involved in the project’s development, giving credit to a collective effort from the company, political will, and regulatory oversight.

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The huge risks and rewards of Papua New Guinea’s Porgera gold mine

David James | Business Advantage | 13 March 2019 

The Porgera gold mine in Papua New Guinea’s Enga Province is a world class gold mine but, as Executive Director for Barrick (Niugini) Ila Temu explains, it is also one of the world’s most difficult mines to operate.

Drainage, breakdowns in the infrastructure and illegal mining are the three challenges Porgera miners and executives face.

But the rewards are also great. Despite the severe obstacles, Porgera’s production in 2017 was about 500,000 ounces of gold and 204,000 in 2018 (with production affected by the Highlands earthquake).

Barrick Gold Corporation’s new President and CEO, Mark Bristow, explained during his recent trip to Papua New Guinea that the future of the Porgera mine is considered promising.

‘When you look at the current plans of Porgera, it has the potential to be able to deliver 500,000 ounces [per annum] for the next 10 years,’ he reportedly said.

‘The geologists are indicating that there’s potential for another 10 years after that.’

Barrick (Niugini) Executive Director Ila Temu says the company moves 65,000 tonnes of earth per day, 55,000 tonnes of which is waste.

‘Porgera has the potential to be able to deliver 500,000 ounces for the next 10 years.’

Grading in the open pit is about 2.6 grams per tonne and about 1.8 grams per tonne in the long term stock piles.

‘The underground gold grade is slightly higher: 6.8 grams per tonne.’

Infrastructure

Porgera is located at the end of the Highlands Highway, which means it is vulnerable to landslips and tribal conflict taking out power lines.‘So we become a mud moving operation rather than a mining company.

Temu says in 2016 the highway was closed for 101 days, and 54 days in 2017.

‘When you are on the end of the supply chain, you have to think pretty quickly about what to do.

‘That impacts on our ability to operate but with partnership we can get over these issues.

‘So we become a mud moving operation rather than a mining company.’

‘As if that was not enough we were also impacted by the [2018] earthquake.

‘The power station at Hides was knocked out. [We lost] generators, transformers—and the control room was turned upside down.

‘The gas pipeline that feeds us the gas was also shifted a few metres.

‘So, it was a significant impact. We went to mobile diesel power and got generators from Lae.’

Rainfall

Temu says whenever there is heavy rainfall, a large volume of mud comes into the mine.

‘If you don’t have a good dewatering system you have to stop operations to try to get that water out.’

In 2016, the mine had a ‘significant mud rush into the pit and the underground’ and later that year a sink hole failure.

In March 2017, rain caused a collapse in the west wall of the mine.

‘We budget for about 200,000 tonnes of mud per year. When the rainfall increases, that number increases four- or five-fold.

‘So we become a mud moving operation rather than a mining company.

‘It is good to have shareholders with deep pockets to come in and help us resolve these issues pretty quickly.’

Illegal miners

Illegal miners trespassing on the mine is a problem that Porgera has faced ‘since day one’. It is mainly a safety issue but it also has a business impact.

‘Over the years, most of the illegal miners have been non-Porgerans.

‘In 2018, on average, about 500 illegal miners were on the floor of the pit in the mine each day.’

‘They are young, male, have plenty of energy and plenty of time on their hands—and they need some cash.

‘Porgera, having free gold, becomes an easy target.’

Temu says in 2018, on average, about 500 illegal miners were on the floor of the pit in the mine each day.

If the number of illegals is bigger, the mine stops operating.

‘We move our people away until we clear the situation.

‘This impacts us every day in hours lost in production—because of their presence.

‘Earlier this year there were, for the first time, firearms in the pit. The illegal miners were fighting each other.’

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Bougainville’s Momis says mining opponents are lying

Autonomous Bougainville Government President John Momis.

Radio New Zealand | 12 March 2019

The President of Bougainville says landowners who criticise the government’s proposed mining law changes have been misled.

The president announced plans for sweeping changes to the mining law in January, as the government sought money to help pay for the region’s referendum on independence from Papua New Guinea.

It has been criticised by landowning groups and human rights organisations but John Momis says these people have been misled by mining companies and others who want their own deals.

Mr Momis said the new law would greatly increase returns for landowners, earning them much more than the current measure which only guarantees their ownership of the minerals while they are in the ground.

“Under our proposal they own the resources, unextracted or extracted, and based on the known ore body we can raise the money ourselves.”

The mining law change would also see the government set up its own joint venture with an Australian entity, called Caballus.

The joint venture, to be known as Bougainville Advance Mining , would aim to re-open the huge and controversial Panguna mine.

The Bougainville referendum is set to be held in mid October.

Bougainville to go ahead with controversial law rewrite

Radio New Zealand | 12 March 2019

The Bougainville Government remains committed to rewriting the autonomous Papua New Guinea region’s mining law.

President John Momis says critics of the move are lying.

He says the new law would mean landowners retain ownership of the minerals after mining, making the benefits they receive much greater.

In January Mr Momis announced plans to change the law and team up with an Australian businessman, Jeff McGlinn, forming a company called Caballus.

It sparked an outcry but as Mr Momis told Don Wiseman his government is undeterred.

TRANSCRIPT

JOHN MOMIS: That will enable us to find a developer or investor to come in a joint venture with us, on the basis that we don’t pay anything because the Panguna ore body is a known ore body. It’s 65 billion kina worth. It’s known. And there’s only one Panguna mine – that’s excluding the Seven other Sisters. There are many companies in the world, if we gave them the mining licence they would go and raise money based on the value of this ore body. We, the landowners, will raise that, raise the money ourselves.

DON WISEMAN: yes but some of the key landowners say they are being shut out of this whole process.

JM: That’s not true. They are being lied to by RTG [Australian mining company] and others. Under the current mining law, which is better than the national mining law, the landowners only own the resource as long as it’s in the ground. Unextracted. Once it’s extracted the developer takes over and the landowner only gets five percent. If they wish to increase their share they can only increase it by another five percent, which they have to purchase. Under our proposal they own the resources, unextracted or extracted, and based on the known ore body we can raise the money ourselves.

DW: There has been criticism of your changes to this mining act. You clearly need to sell it more around Bougainville.

JM: That’s right, yes. I admit that our people made a mistake of not conducting a proper presentation, which they have subsequently done, and many people have seen and are saying, well, this is the best we have. We have – this week actually – while I am on the roadshow with the UN Nations Resident Co-ordinator and the Minister for Bougainville Affairs, we are going on a weeklong roadshow, our ministers will be conducting awareness amongst the members and others. We are very confident, once people understand. They have been misled or told that we are going to take everything away from the landowners. It’s nonsensical. in fact under our mining law they don’t even have to pay for their share because it’s their resource.

DW: Jeff McGlinn, though, he is not someone with a direct involvement in mining is he. I know he is involved in mining machinery and so on, but he’s not a miner.

JM: He’s not a miner, but there are mining companies in the world, we can hire the experts. I think it’s 65 billion US dollars worth of ore in the pit, the current Panguna pit, mineable over 27 years. That’s a lot of money.

DW: Well I guess  the critical thing is how much of it comes back to Bougainville?

JM: Well under our law, or proposed initiative, I think it’s 58 billion. 50 billion will come back to Bougainville and only eight billion will go to the  developer. under their proposal, [RTG] 50 billion will go to them and the poor Bougainvilleans will only get 8 billion.

DW: So you are going to get a developer to come in, spending billions redeveloping the mine and they are not going to earn very much from it.

JM: Well they will get a lot of money. We own the resources and I think it’s six billion to develop the mine, and they can get the money back, quite comfortably.

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Call for Nautilus seabed mining licences to be cancelled in Papua New Guinea

On 21 February 2019, Nautilus Minerals Inc. filed for protection from creditors under the Canadian Companies’ Creditors Arrangement Act.  Whilst claiming this as a victory in their decade-long campaign to stop the Nautilus Solwara 1 Project in the Bismarck Sea, local communities and civil society in Papua New Guinea are taking heed that the fight is not over until all Nautilus licences are cancelled.

“This is very welcome news!” stated Jonathan Mesulam, Alliance of Solwara Warriors whose village on the west coast of New Ireland Province is situated only 25km from the Solwara 1 project. “New Irelanders and communities from Provinces across the Bismarck sea have given their undivided support for many years to stop experimental seabed mining.”

“The longer Nautilus is delayed and tied up in protecting itself from bankruptcy the longer they are in debt and not able to get Solwara 1 up and operating, and the closer we are to stopping the project and protecting our livelihoods and seas.”

“The voices of local communities through the Alliance of Solwara Warriors, Churches and civil society in PNG have consistently opposed Nautilus Minerals,” declared Christina Tony, Bismarck Ramu Group. “We strongly believe this unified voice is what is driving Nautilus Minerals out of our country and towards bankruptcy. Other companies thinking of mining the sea floor in PNG or the Pacific should pay attention.”

The court order under CCAA is an agreement between Nautilus and its two main shareholders, MB Holding & Metalloinvest. Nautilus’ auditor the accountancy firm PwC is acting as court monitors to oversee a plan to sell company assets so Nautilus can either continue as a smaller business or those it owes money to will get the best value if the company goes bankrupt. Nowhere in the court order does it mention the PNG Government who owns a 15% in Solwara 1 and the equipment.

“This small group of key interested players will advantage themselves to the detriment of the PNG Government,” alleged Sir Arnold Amet, former Papua New Guinean Attorney General who has repeatedly warned the PNG Government of the financial liabilities of holding a 15% stake in Nautilus Minerals.

“While this is good news for those of us who have been calling for the project not to go ahead, the fight is not over. Not until the PNG Government terminates the Solwara 1 operating licence, as well as all of Nautilus’ licences in the Bismarck and Solomon Seas, will we be able to claim victory.”

The court order briefly lists three potential legal cases: contract arbitration with Sichuan Hungua Petroleum equipment; Gunner Cooke over legal fees for MAC and the continuing problems with loss of the support vessel; and threatened legal action by MDL Energy over “alleged misleading public disclosure”.

“There appears to be no legal action listed regarding the PNG Government” continued Sir Amet. “Has the PNG Government been ‘taken for a ride’ by Nautilus? Did they ever really intend to mine at Solwara 1? Our Government should explore recouping its failed investment by suing Nautilus for breach of contract.”

Peter Bosip, Executive Director, Centre for Environmental Law and Community Rights, who are supporting the landmark case bought by coastal communities challenging the Solwara 1 project under Sections 51 and 59 of the PNG Constitution[2] claimed, “We have seen the original company directors and officers of Nautilus Minerals walk away with a lot of money in their pockets to form DeepGreen Metals, a company promising riches to other Pacific Island nations.” 

“This is a case of companies mining the market. Whether they have intentions of mining, or not mining the resource, they are cheating the PNG government and its citizens.”

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