Category Archives: Mine construction

Derelict mine caused a bloody war. Now Aussie companies are fighting over it again

Heavy trucks sit rusting on the edges of Panguna copper mine, closed in 1989 as a result of sabotage.

Sarah Danckert and Ben Bohane | Sydney Morning Herald | November 15, 2019

Iron ore magnate Andrew “Twiggy” Forrest has joined the race with an unruly bunch of small, struggling mining companies, all with links to Australia and share prices of 10c or less, for access to some of the world’s biggest copper and gold deposits on the Pacific island of Bougainville.

The manoeuvring over the gigantic, mothballed Panguna mine comes ahead of an independence referendum later this month that could turn Bougainville into the world’s newest nation after disputes over foreign mining prompted a bloody, 10-year war that killed perhaps 15,000 people.

However, China is also sniffing around opportunities in Bougainville, although not necessarily the Panguna mine itself, which was valued recently at a staggering $US58 billion ($84 billion).

Previously run by Rio Tinto, the mine was at the centre of a decade-long conflict over allegations that locals were being ripped off and the environment damaged by foreign mining companies. The war continued well after the mine closed as a battle of control for the country raged between the Bougainville Revolutionary Army and the Papua New Guinea Defence Force. It was the most serious conflict in the south Pacific since World War II.

The Age and The Sydney Morning Herald have confirmed that representatives of Mr Forrest’s mining company, Fortescue, travelled in recent months to the island and were exploring growth opportunities there.

“As a leading mining company with world-class expertise, we constantly assess opportunities to build on our operational reputation to drive future growth through product diversification and asset development,” chief executive Elizabeth Gaines said. “Consistent with business development activities, representatives from Fortescue have visited Bougainville Island to learn about the region and potential opportunities.”

Other companies – including one chaired by a former Liberal defence minister David Johnston and another by Arabian horse breeder and luxury goods dealer Jeff McGlinn – have also been striving to gain local support on the island to reopen the mine, which was shuttered in 1989.

Meanwhile, a Chinese delegation is rumoured to have offered substantial funds in late 2018 to help finance a transition to Bougainville independence, along with offers to invest in mining, tourism and agriculture, with a figure of $US1 billion cited. A new port was also reportedly proposed.

A new nation to our north?

On November 23, Bougainvilleans will go to the polls and are expected to vote overwhelmingly for independence from Papua New Guinea. But in the wake of that expected vote, there is a real risk of new disputes between landowner groups as miners, many with links to Australia, could reignite the crisis that engulfed the island 30 years ago.

“Are they f—king mad?” asks one former Rio Tinto executive who worked at the company when it was the majority owner of Bougainville. “Re-opening Panguna would be a disaster.”

In its heyday, the mine, which would take an estimated $US5 billion in infrastructure spending to restart, was a productive asset for Rio Tinto, then known as Conzinc Rio Tinto. During the final year of production in 1988 and 1989, Rio’s subsidiary Bougainville Copper (BCL) extracted 550,000 tonnes of copper concentrate and a whopping 450,000 ounces of gold.

Already the tussle for Panguna has sparked a race to promise the best deal and the highest royalties to landowners while stemming the environmental degradation that has ravaged Bougainville. But that race has also already sparked intense political disagreement between rival groups on the island.

Rio’s former subsidiary BCL is still in the race for a mining licence, though Rio divested its shares and walked away in 2016. But a number of new entrants are also in the game.

Among them is Toronto and ASX-listed RTG Mining Inc – which has links to the Philippines and counts the son of billionaire Australian stock picker David Hains, Richard, as the largest shareholder of its Toronto-issued shares.

Another ASX-listed company, Kalia Limited, has been given two permits to explore in the northern tip of Bougainville. Kalia counts former Defence Minister David Johnston as its chairman and Perth-based mining entrepreneur Nick Zuks as its top shareholder. Johnston’s biggest claims to fame at home are a controversy over his lavish spending on entertainment as minister and comments that South Australians couldn’t build a canoe, much less a submarine.

Kalia’s bid is financially supported by a company run by Australian polo patriarch Peter Yunghanns. Another significant shareholder, Graeme Kirke, is the founder of Kirke Securities where Mr Forrest previously worked.

More recently a new player, Caballus Mining, has arrived in Bougainville. It sparked fears, rumours and intrigue when it emerged the Autonomous Government of Bougainville had drafted new laws that would assign the responsibility for issuing mining licences to a new entity – Bougainville Advance Mining and a foreign partner. Many believed that partner would be Caballus.

Caballus Mining was set up only in August 2018. Its sole director is Arabian horse breeder and luxury goods dealer Jeff McGlinn – a man who posted a flashy social media video of Saudi royalty at a luxury event, and another of him giving one of his fine equines to classical crossover singer Andrea Bocelli.

The entry of Caballus sparked fears among Bougainville locals – specifically those linked to rival miners – that a three-way fight for Panguna would erupt.

Slugging it out

Already, former Rio subsidiary BCL and Australian-Toronto based RTG Mining have been slugging it out via statements on their websites or on the Australian Securities Exchange. RTG claims BCL has lost its local goodwill and cannot operate in Bougainville, and that RTG has the support of a landowner group the Special Mining Lease Osikaiyang Landowners Association – one of the groups who say they represent landowners in the Panguna area.

BCL hit back saying the landowners’ association (known as SMLOLA) is a new invention and points to recent statements disputing its provenance. In turn, the landowner groups supporting BCL’s plans to reopen Panguna have also come under fire.

The one thing both have in common is their respective share prices are in the gutter, with BCL trading at 10 cents a share and RTG trading at 6.5 Canadian cents (7.4 cents). Kalia’s share price is just one-tenth of a cent.

The disputes between miners have been reflected in intense politicking among local landowner groups and political players on Bougainville. Bougainville’s president John Momis has copped much criticism for entertaining the Caballus deal, and the Autonomous Bougainville Government has given mixed signals on its position on mining.

Momis initially supported a moratorium on mining at Panguna to avoid reigniting old conflicts between landowner groups. The moratorium was put in place in early 2018, but the government now appears to favour mining across the island as a means to generate income and underwrite independence.

Autonomous Bougainville Government President John Momis.

Landowners are guaranteed rights under the 2015 Mining Act, but in an urgent bid in January 2019 to raise funds for the referendum, the government proposed to abolish those rights, at the same time allocating “near monopoly” rights to Caballus’s Bougainville Advance Mining. That legislation was later rejected by the government’s legislative committee, illustrating how politically contentious this issue will be in an independent Bougainville.

Fiscal self-reliance

In recent months, the mudslinging by supporters of both groups has died down. Several sources linked to the company and NGOs operating on the island said this was due to the request by the government that the miners are not seen to be influencing the independence vote.

There was no answer from Caballus in response to a series of questions, including regarding its links to Bougainville Advance Mining and how it achieved such a prime position. McGlinn was last week travelling in Europe.

Calls to the Perth offices of another suitor, Kalia Limited, which is now led by Michael Johnston, the former boss of failed PNG miner Nautilus Mining, went unreturned. David Johnston (no relation to Michael) and Kalia shareholder Nick Zuks also did not return calls.

RTG chairman Michael Carrick was also loath to talk about the issue.

“Politics is played extremely robustly in PNG and the facts/truth are often amongst the first casualties,” Carrick said via email from his Perth office. However, he added that mining would be part of Bougainville’s future.

“There can be no independence without first setting the country on a pathway to fiscal self-reliance and Panguna is the only asset which can assist this fundamental objective.”

BCL company secretary Mark Hitchcock said from his office in Port Moresby that the company retained strong support among landowners and rejected suggestions the company had lost its social licence to operate.

“There is at times frustration when some purporting to speak on behalf of all landowners are in fact representing a narrower interest. Regardless, all views are to be respected.”

Luke Fletcher, a long-time Bougainville watcher and executive director of think tank Jubilee Australia warns of the “resources curse” that has plagued PNG.

“This is one of the problems of the resource curse, you have these big revenues sitting in bank accounts that can be misappropriated quite easily,” he said.

It’s a curse that many think is worth risking.

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Chinese redevelopment of Solomon Islands’ Gold Ridge mine dubbed ‘way over the top’

PHOTO: The Gold Ridge mine has a long and chequered history.

Key points:

  • The deal follows a month after the Solomon Islands switched diplomatic ties from Taiwan to Beijing
  • The Solomon Islands will not own the new infrastructure
  • The former Australian-listed company that owned the mine sold it to local landowners for $100 in 2015

ABC News | 30 October 2019

Chinese companies will build and control power and port facilities, roads, rail and bridges on an island within the Solomon Islands, as part of an $825 million deal to revive an abandoned gold mine, according to new contract details.

The gold project agreement, described by Chinese ambassador Xue Bing as an “early harvest” of the new diplomatic tie-up between Beijing and Honiara, gives Chinese interests an increased foothold in the Pacific, long under the influence of the United States and its allies.

While locals initially expressed fears the Gold Ridge mine deal would saddle the island nation with debt, those attending a weekend ceremony at the mine site were told the Solomons would not pay for the project infrastructure.

Nor will the country own the infrastructure.

A company majority-owned by Hong Kong-listed Wanguo International Mining, which has the project rights, will retain ownership of any project related-infrastructure, according to the project terms presented to attendees.

Wanguo has contracted state-owned China State Railway Group $825 million to complete the works over several phases.

The previous owner, Australian-listed St. Barbara, sold the mine for a nominal $100 to a landowner group in 2015, and that group went on to secure interest from Australian-based Chinese company AXF Resources, and then Wanguo.

Those attending the ceremony at the mine site, located about 30km south of Honiara, were told the large contract would involve a significant infrastructure component beyond the immediate mine site.

“Only China, proceeding from the friendship and wellbeing of the local people, is ready to overcome all obstacles to undertake this project by planning to build roads, bridges mining facilities and a hydropower station,” Mr Xue said, according to the recording.

A separate announcement from China Rail in September also said the contract included port work.

The infrastructure will be built in and around Honiara on the island of Guadalcanal, a strategic Pacific location that saw fierce fighting in World War II.

While the Solomons government, China Rail and the project operators have denied any political involvement in the mining deal, it was presented at the project ceremony as an example of what the new relationship between China and Solomons can deliver.

The agreement was announced in mid-September, coinciding with a decision by the Solomons Government to switch diplomatic ties from Taiwan to Beijing, angering the United States in the process.

“This is not only a new beginning of the Gold Ridge mine, but also a very important early harvest of the friendly cooperation between China and Solomon Islands which established diplomatic relations just 35 days ago,” said Mr Xue, who is the Chinese ambassador to Papua New Guinea.

Solomons landowners and politicians, Chinese officials, and representatives of China Rail and Wanguo were at the ceremony, said a source who attended.

Solomon representatives were repeatedly reassured the Pacific nation would not be subjected to a “debt-trap”, an allegation used against China by the United States.

Wanguo did not immediately respond to questions. The Solomons Government, which did not immediately respond to questions on Wednesday, has previously said it was a private sector deal and was not privy to the commercial arrangements.

Solomons opposition lawmaker Peter Kenilorea said the Gold Ridge agreement was opaque and its terms needed to be better explained.

The size of the contract has perplexed mining analysts, given past private operators have struggled to make the mine profitable.

Independent Australian-based mining analyst Peter Strachan said the agreement was “way over the top” for a relatively low-grade gold project with modest reserves.

“There has to be some back story on this,” said Mr Strachan, who has visited the Guadalcanal mine site.

The troubled Gold Ridge mine last operated in 2014, before severe floods halted production.

At its peak it was the source of 30 per cent of GDP in the Solomons, which is largely reliant on timber exports. Solomons GDP was at $1.4 billion last year, according to World Bank data, making it one of the world’s smallest economies.

The project owners have not released an anticipated date the project will restart.

Walton Naezon, chairman of the Gold Ridge landowner group, said the Gold Ridge deal was a commercial arrangement with no political input.

He said the project’s two other equity owners, Wanguo and AXF Resources, were raising $275 million to pay China Rail to bring the mine back into production.

“The balance is the second phase to be approved, which includes things like underground work,” Mr Naezon said, referring to the remainder of the $825 million contract.

“China Rail will bring their own machines. They will employ 70 per cent local labour and the rest will be their own staff.”

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Troubled Gold Mine Sold to Local Landowner Company for A$100 Relaunched in Solomon Islands

Photo: Flickr/Jenny Scott

Sputnik News | 27 October 2019

The troubled Gold Ridge mine in the Solomon Islands changed ownership multiple times over the years and was shut down by its last owner in 2015 after severe flash flooding.

The Gold Ridge goldmine in the Solomon Islands was officially relaunched Sunday in Central Guadalcanal, reports Radio New Zealand.

The mine which is currently the property of a local landowning company, Gold Ridge Community Investment Limited, is less than an hour’s drive from Honiara across the Guadalcanal Plains and has stood dormant for the past three years.

It is now being redeveloped by the Chinese miner Wanguo International working in partnership with Chinese owned Australian developer AXF Group and local landowners in Central Guadalcanal.

Speaking to RNZ Pacific earlier in the week, a spokesperson for Gold Ridge, Allen Wang, applauded the new contract for the reconstruction of the mine by the China Railway International Group, emphasizing he believed China Railway “had the mining experience, construction expertise and Pacific experience to make a great contribution to the development of a world class mine in Solomon Islands”.

The contract signed by Honiara and China Railways involves two major phases.

The first phase includes an exterior mountain-stripping project followed by the installation of interior mining equipment and facilities.
The second phase includes the construction of roads, bridges, and a nearby reservoir along with dock facilities and a hydropower station.

The mine on central Guadalcanal, south-east of the capital Honiara, began operation in 1998, and at the height of its production in 2012 accounted for 20 percent of the country’s entire gross domestic product.

However, a succession of foreign owners and intermittent periods of closure due to civil unrest and environmental problems left a troubled legacy.

After Cyclone Ita and torrential rain damaged infrastructure and forced the mine to shut down in 2014, its Australian owner, Santa Barbara, sold the venture and its legal liability a year later to Gold Ridge Community Investment Ltd, a local landowner company for AU$100.

Shortly after St Barbara sold the mine, the Solomon Islands Government declared it a disaster area when a tropical cyclone filled the dam to capacity.

On 12 September 2019, the mine signed a deal with China Railway Group Limited of China worth US$825 million to build and lease a railway system and mining service station.

China Railway International announced the deal on its website’s notice board on the date it was signed, with parent company China Railway Group announcing it on 16 September, the day the Solomon Islands and Taiwan officially broke ties.

The contract is to last until March 2034.

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PanAust Meets With Regulatory Agencies In PNG

Artist’s impression of the proposed Sepik Development Project at Frieda River. Credit: PanAust

Post Courier | October 24, 2019

PanAust has successfully met with regulatory agencies in PNG regarding the independent peer review of the Sepik development project’s environmental impact statement (EIS) and dam integrity.

Before that, it has also established the Sepik development project website (www.friedariver.com) as a platform to share project information with all stakeholders. The website hosts fly through videos, factsheets and other project-specific information.

The Sepik development project’s environment impact statement was made publicly available on the project website ahead of the Conservation and Environment Protection Authority (CEPA) statutory awareness campaign, which has started in this month.

According to PanAust executive chairman Dr Qun Yang the company remains committed to working with the government to fulfill its statutory requirements and obtain the necessary permits to progress the project. He said CEPA confirmed independent consultants Hydrobiology will complete the independent peer review of the EIS. Snowy Mountains Engineering Corporation (SMEC) will undertake a dam integrity assessment.

“A kick-off meeting was held in the Brisbane office, and a site visit undertaken with CEPA, Mineral Resources Authority (MRA), company representatives and the independent consultants during the quarter.

“The company continues to support its host communities in PNG with ongoing medical and education support,” he said.

Dr Qun said during the September quarter, the PanAust executive management team agreed on strategic objectives that will ensure the company’s continued growth and prosperity. “

Our new strategic direction is anchored around three key pillars,” he said. “First, we will work to sustain the business in the short term through the extension of mine life at our Phu Kham copper-gold and Ban Houayxai gold-silver operations. “Next, we will continue to actively seek out opportunities to acquire high quality operating and near-term development assets in Southeast Asia (preferably Laos) and progress exploration activities in Laos and Myanmar. “Finally, we will look to grow the business in the long term through the advancement of the Sepik Development Project.”

PanAust’s focus for the December quarter will be to deliver outstanding full-year production and cost outcomes, and on defining clear pathways to achieving its strategic objectives.

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Worrying sign for Harmony as Wafi-Golpu partner, Newcrest, scales back project activity

David McKay | MiningMX | October 24, 2019

AUSTRALIAN gold miner, Newcrest Mining, has scaled back its presence at Wafi-Golpu, a Papua New Guinea (PNG) project it holds in joint venture with Harmony Gold, after running into “continued delays”.

Sandeep Biswas, MD and CEO of Newcrest, said in the firm’s third quarter report today the project continued to be delayed “… by unresolved legal proceedings between the National Government and the Morobe Provincial Government” regarding how the economic benefits of the project would be distributed.

The PNG government was also running a separate review of the project in terms of broader economic participation and distribution policies.

As a result, the Wafi-Golpu Joint Venture (WGJC) has deferred the planned work programme whilst the company’s project team based in Brisbane and on site in PNG had been reduced. Other activities such as community and environmental programmes at the site would continue, however.

“It is difficult to estimate the duration of this delay and the market will be advised when discussions recommence,” said Biswas. He added that the PNG government had continued to “signal its support for the project”.

Harmony Gold said in May that following the appointment of PNG’s new prime minister, James Marape, there had been uncertainty about how quickly the project may progress. The PNG first focused its attention on natural gas projects against a backdrop of political unease in the country. Earlier this month, PNG authorities issued warrants for the arrest of the country’s former Prime Minister Peter O’Neill on suspicion of “official corruption”.

The O’Neill government signed a memorandum of understanding (MoU) regarding the development of Wafi-Golpu but it did not state the ownership that the PNG government may take in the project.

“Consequent delays in the work program will increase permitting costs,” said Morgan Stanley of Wafi-Golpu in July.

“We view PNG as a relatively high risk jurisdiction, and if permitting approvals are not forthcoming, development of the project could stall and exacerbate our concerns over Harmony’s long-term production decline,” said JP Morgan Cazenove in a note.

Significant delays in the development of Wafi-Golpu could also heighten risks about Harmony’s long-term production profile notwithstanding last year’s purchase of Moab Khotsong from AngloGold Ashanti.

Harmony is thought to be considering the possibility of making a bid for the Mponeng and Mine Waste Solutions assets in South Africa that AngloGold has put up for sale.

The Wafi-Golpu copper-gold mine could cost Harmony Gold $2.82bn in initial capital expenditure to build to commercial levels of production as per a 2018 feasibility study. Of this, Harmony will shoulder about 50% with Newcrest Mining Limited, an Australian firm, carrying the balance. Average annual gold production was put at some 266,000 ounces.

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Solomons’ gold mine to launch ‘world class’ redevelopment

Empty trucks at the Gold Ridge mine

Radio New Zealand | 23 October 2019 

A closed Solomon Islands’ gold mine is set to be officially relaunched this weekend.

The troubled Gold Ridge Mine, which has changed ownership multiple times over the years, has been closed since 2015.

It is now being redeveloped by the Chinese-owned Australian developer AXF Group in partnership with local landowners in Central Guadalcanal.

The full details of the reconstruction by the China Railway International Group is expected to be announced during a ground-breaking ceremony on Saturday, the Solomon Star reports.

Gold Ridge senior official, Allen Wang, said he believed China Railway had the mining experience, construction expertise and Pacific experience to make a great contribution to the development of a world class mine in Solomon Islands.

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Geopacific sets up Woodlark development with $45m package

Geopacific’s Woodlark gold project is in the pacific ‘ring of fire’, home to some of the world’s best gold projects. Image: Geopacific.

Australian Mining | October 21, 2019

Geopacific Resources has completed a $40 million share placement to fund development of the Woodlark gold project in Papua New Guinea.

Additionally, Geopacific has also offered eligible Australian and New Zealand shareholders a share purchase plan, which will deliver a further $5 million.

The placement was made to sophisticated and professional investors for 1600 million fully paid ordinary shares at $0.025 per share, representing a 10.7 per cent discount to the last close.

The share purchase plan will be offered at $0.025 per share, allowing shareholders to acquire up to $30,000 of new shares.

Geopacific managing director Ron Heeks was pleased with the result of the capital raising, saying it showed the company’s shareholders were committed to seeing Woodlark start production.

“The capital raising has provided an excellent result, with shareholders demonstrating their commitment to moving Woodlark into production,” Heeks said.

“All shareholders, new and existing, clearly understand the tasks and rewards ahead and we are delighted and appreciative of their strong support to begin the process of producing gold.

“The raising will allow the company to commence early site works in preparation for process plant construction, which will enable gold production to be reached in a shorter timeframe.”

The capital raising’s net proceeds will fund front end engineering design, civil construction, relocating the Kulumadau village, mine camp upgrades, project financing costs and other development and expansion working capital.

The share purchase plan will open to shareholders on November 4 and close on November 29.

The Woodlark project is on an island in Papua New Guinea’s Milne Bay province. It is surrounded by world-class mines, including Newcrest Mining’s Lihir and St Barbara’s Simberi, and shows promise for a low-cost, simple processing project.

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