Category Archives: Mine construction

Court hearings in Port Moresby and Melbourne over future of Bougainville’s Panguna copper mine

The abandoned Panguna copper mine. Credit Sydney Morning Herald

Kevin McQuillan | Business Advantage | 8 May 2018

Two court hearings on May 17, one in Port Moresby and the other in Melbourne, will help determine the future of the exploration licence for the Panguna copper mine in Bougainville. Business Advantage PNG looks at the ongoing competition for the rights to exploit the resource.

The decision to refuse an extension of Bougainville Copper Limited’s exploration licence and to impose an indefinite moratorium over the Panguna resource, followed a statutory Warden’s meeting in December 2017.

There was ‘a narrow divide between those supporting the mine to be opened by Bougainville Copper Ltd (BCL) and those that oppose it’, according to Bougainville President John Momis.

BCL has successfully sought leave to apply for a judicial review of the decision to refuse its licence extension, citing legal and procedural concerns.

‘While the moratorium has been gazetted, it has no impact on existing exploration licences or applications for extension, lodged prior to the moratorium,’ BCL Company Secretary, Mark Hitchcock, tells Business Advantage PNG.

‘BCL remains the holder of the exploration licence (EL1) until the matter is ultimately determined,’ he says.

BCL has held the licence since the mine closed in 1989. The company is now owned by the PNG national government (36.4 per cent), the Autonomous Bougainville Government (36.4 per cent), European shareholders (four per cent) and 23.2 per cent through the Australian Securities Exchange (ASX). Rio Tinto gave away its stake in 2016.

Those opposing BCL’s involvement are led by Philip Miriori, who claims chairmanship of the Special Mining Lease Osikaiyang Landowners’ Association (SMLOLA).

He has thrown his support behind a bid by Perth-based junior miner, RTG Mining, to gain the exploration licence, setting up a joint venture company, Central Exploration, of which RTG owns 24 per cent.

One of RTG’s major shareholders holds another 32 per cent, and the SMLOLA retains 44 per cent.

Miriori’s chairmanship of the SMLOLA remains in dispute. The 367 authorised customary heads of the 510 blocks of land within the special mining lease area of Panguna say they do not recognise Miriori as the Chairman of the SMLOLA and support the extension of BCL’s exploration licence.

Melbourne hearing

On the same day as the Port Moresby hearing, BCL will be in court in Melbourne, seeking disclosure about the relationship between RTG Mining and the SMLOLA.

Miriori and other supporters admit they are being paid by RTG, but Miriori has told the ABC that the payments are legitimate salaries, not inducements.

‘That is always a normal part of anything, nothing is free,’ he says.

The action seeks disclosure from RTG Mining and Central Exploration about any compensation or benefits paid to the SMLOLA.

One analyst close to the proceedings says any disclosure could determine the possibility of ‘unlawful interference’ with BCL’s exploration licence.

For his part, Momis says his government believes it would be ‘untenable under current circumstances’ for any developer to develop the mine.

‘We have some problems with RTG right now,’ Momis tells RNZI.

‘In fact, they are causing a lot of confusion and division in the community and we are not prepared to go ahead while this situation prevails.’

Exploration data

Should RTG Mining or any other company win the exploration licence, the next battle will be over the data about the location and extent of resources.

‘BCL has an extensive database of historical data and project information from the mine operations prior to closure in 1990,’ says Hitchcock. ‘This data remains the intellectual property of the company.’

Even if that data is not protected by intellectual property law but is only considered confidential information, it will still require cooperation from BCL to access, according to Alexandra George, Senior Lecturer at the University of New South Wales, who specialises in international intellectual property law.

She tells Business Advantage PNG it might be expensive and time-consuming to obtain.

She says under Australian copyright law, ownership of a database is not straightforward. Whether or not RTG Mining could access the data may depend on the terms of the exploration licence, any special legislation, and on the terms of any contracts or licence agreements that have been entered into.

‘If [the data] was not available, having to reinvent the wheel would add significant costs,’ says George.

‘Perhaps the safest way of assessing value is what the market is prepared to pay.’

‘We estimate it would take any other company or entity at least two-to-three years to replicate the BCL database through exploration activities and would cost in excess of A$200 million (K400 million),’ says Hitchcock.

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Anglo American divests from Nautilus over risks of deep sea mining

Major mining company withdraws from high risk Solwara 1 deep sea mining project – will Nautilus Minerals go under before reaching the ocean floor?

Deep Sea Mining Campaign | Monday 7 May 2018

In advance of their London AGM on 8th May, Anglo American has exclusively confirmed to the Deep Sea Mining Campaign that they have exited their investment in the Nautilus Minerals Solwara 1 deep sea mining project.

Dr. Helen Rosenbaum, of the Deep Sea Mining Campaign said:

“We are pleased that Anglo American engaged with us and listened to the concerns of coastal and islands communities in Papua New Guinea, whose environment and way of life would be devastated by Nautilus’s proposed Solwara 1 mine.”

Dr. Rosenbaum continued:

“Anglo’s decision to dump their minority stake in this controversial and floundering company was the only option consistent with their international commitments to sustainability, human rights, and environmental stewardship.  Deep sea mining is financially and environmentally risky. The legitimacy of the Solwara 1 project has been questionable right from the outset with independent reviews highlighting significant flaws in the Solwara 1 Environmental Impact Statement.” 

Legal action launched by Papua New Guinean communities will also answer questions about whether the Solwara 1 project was lawfully approved. In the meantime local communities have turned out in force at formal hearings held in PNG’s New Ireland Province to object to the extension of Nautilus exploration licences. 

Anglo’s decision reinforces the growing opposition to deep sea mining. Sir David Attenborough is the latest to add his voice against this hazardous and unnecessary emerging industry, describing the Solwara 1 project as “deeply tragic.”

Andy Whitmore of the Deep Sea Mining Campaign, who will attend the Anglo American AGM noted that:

“In terms of financial and reputational risk, Anglo American have chosen a good time to be exiting. But for Nautilus it looks like it could not have come at a worse time, and may well be the final nail in the coffin for this dangerous experiment.”

“The company continues to limp along with bridging loans from its two long term major shareholders – MB Holdings and Metalloinvest – while continuing to accumulate significant debt with interest payable at 8% per annum.  One wonders how long this can continue and when these shareholders will be forced to pull the plug.”

Nautilus’ recent investor updates reveals it is even unable to raise the finance to complete the Production Support Vessel essential to its operational model.  The investor update notes “there can be no assurances that the Company will be successful in securing the necessary additional financing transactions within the required time or at all.”

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It must be a standalone gas project warns Western Province Governor

Loop PNG | May 7, 2018

The Fly River Provincial Government is putting the State and the O’Neill-Abel Government on Notice that discussions on developing P’nyang Gas Field must be a STANDALONE GAS PROJECT in Western Province.

“This statement is on behalf of P’nyang Gas Project landowners, Western Province and the 8 million shareholders of Papua New Guinea,” says Western Governor Taboi Awi Yoto.

While welcoming the recent announcement by O’Neill-Abel Government on the accomplishment of the national building policies to ensure its citizens participate more fully and directly in our country’s gas industry, Yoto noted that the Fly River Provincial Government has to use this opportunity to benefit its people by utilising development of gas projects in the province.

Governor Yoto also noted that leveraging from Ok Tedi Mine of its skill labour, professionals and established contractors, Papua New Guineans including his people could participate from the PDL gas conditioning facility, to the pipeline and downstream storage and gas treatment plants.

This complements the requirement of the national and local content policy, utilise Domestic Market Obligation requirement for domestically produced gas for power generation and related downstream products for investment opportunities under the Third party Access code.

“Fly River Provincial Government has the capability and the capacity to undertake challenges to ensure that the P’nyang Gas project is developed in the province. My Government as the host province to more than 20 Trillion Cubic Feet (TCF) of gas deposit, currently featuring the 4.6TCF in P’nyang Gas field, we are prepared to host the next LNG in the province.

“This standalone project will enable the stranded gas fields in the province to optimise the opportunity for further development my people and the people of Papua New Guinea hope to benefit from,” the Governor said.

The Governor noted that Papua New Guinea has learnt many mistakes and gained enough experiences from the first LNG Project, called PNG LNG, under the operatorship of ExxonMobil.

Juha Gas field was committed to the PNG LNG Project and awarded a PDL9 in 2009 without development. It was warehoused under a unitisation development concept and it is still anticipating development in 15-20 years’ time.

P’nyang gas eld PRL13 with others holds 80 percent of the Recoverable Gas Fields yet to be committed.

“Papua New Guineans cannot afford to make another mistake by simply ignoring the glaring facts the country is facing when granting a PDL licence to developers who would not only warehouse the gas field, denying beneficiaries’ rights, but also do not comply with the laws of our sovereign State, statutory and regulatory requirements of the various licence conditions, and undermine public service mechanisms.”

In noting the serious negligence to the regulatory and compliance requirement, the Governor said ExxonMobil contradicts mandatory pre-requisites to qualify a Petroleum Development Licence stipulated in the Oil and Gas Act, and yet provided additional 18-month extension under section 54(2) Instruments to resubmit the licence conditions as specified below.

1. Section 47 to SMLI – P’nyang Landowners successfully restrained developers to comply with this before development license was granted

2. Third Party Certification of Reserves for blocks

a. Need to know how much can be produced and how much shareholders should own in the pool for the years of production.

3. Confirmation of extension of hydrocarbon pool into undrilled blocks

4. Complete pre-FEED and FEED Studies

a. Very important for Provincial Government and LLG to understand the corridors of impact and planning required on expected risks and opportunities. FEED directs priorities on gas development agendas, and beneficiary matrix.

5. Furnish Economic Model

a. FRPG Need to be included in the discussions leading up to gas agreement terms, to agree on provincial government’s terms before gas agreement is executed

6. Full Scale Social Mapping and Landowner beneficiary Identification

a. SMLI report does not specify the actual beneficiaries of the PDL, and the Pipeline and Processing LNG facility areas? When will this be done? This is a grave concern to the beneficiaries of the LNG project and the very issues affecting the PNG LNG Project landowners and provincial governments

7. How Environmental Permit was obtained without Pre-Feed and FEED?

a. Environment impact Statement was done in PDL areas only, how about the Pipeline areas without consultation with the Provincial Government and LLG?

8. Conceptual Development Basis and Development Plan to start construction immediately

a. We cannot grant a PDL and wait in anticipation for 20 years. It is lawful that PDL is contingent on the actual Development of the Project. P’nyang Gas Field is not part of the Foundation project and therefore will not utilise the PNG LNG gas transport, gas treating and liquefaction plant. It will be built as a STANDALONE Project upon the grant of PDL.

The Governor, while thankful of the Government for taking a strong stand following consultation with the State and stakeholders said ExxonMobil quickly submitted its application for PDL in 2015 after noting the expiry date of Petroleum Retention Licence of P’nyang (PRL 13) in August 2016.

“In November 2016, DPE contentiously issued to ExxonMobil an Instrument under section 54 (2) of Oil and Gas Act, to provide additional information to support application for grant of a Petroleum Development Licence. The instrument contains specific mandatory requirements by law that Esso PNG P’nyang Limited (subsidiary of ExxonMobil PNG Ltd) was to fulfil after they have failed to meet/satisfy the pre-requisites for consideration of a PDL during the 15 years term under various licensing periods as specified by law.

“On 16th December, confirmation from a 2015 subsequent NEC decision 386/2015 noted PRL 3 Application does not meet the minimum statutory requirement for the grant of a PDL. That application failed to commit to Specific Field Development Plan for State to consider, contradicting section 54 of Oil and Gas Act, among detailed development proposal that will give the beneficiaries, provincial government and Local Level Government and landowners the benefit of a doubt.

“One of the case in point is in December 2015, P’nyang Landowners and affected pipeline Local Level Government successfully challenged the validity of Social Mapping and Landowner Identification (SMLI) studies by ExxonMobil and obtained a National Court order restraining ExxonMobil and the State from rushing into a Development Forum in Kiunga,” stated Governor Yoto.

“We are speaking for the benefit of the 8 million shareholders of this country, and PNG Government under the leadership of O’Neill-Abel simply cannot afford to suffer another misery from the hands of ‘economic hitmen’.

“This important project will compensate for the losses and lessons learnt from PNG LNG project and Fly River Provincial Government is prepared to take necessary steps to ensure that my Project will be developed and processed in the Province.”

The Governor pointed out that Western Province has contributed significantly to the development of this country through Ok Tedi Mining operation and it’s time the Government gives back to the people of this country to develop the gas project in the province as a standalone project, under new fiscal terms and commercial arrangements.

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Anglo American to exit stake in deep sea mining company

“For Nautilus it looks like it could not have come at a worse time, and may well be the final nail in the coffin for this dangerous experiment”

Neil Hume | Financial Times | 4 May 2018

Anglo American is set to end its investment in a controversial deep sea mining company that is trying to develop a gold and copper deposit off the coast of Papua New Guinea.

“We are in the process of exiting our small minority shareholding in Nautilus Mining, as part of the prioritisation of our portfolio on our largest and greatest potential resource assets,” an Anglo American spokesman told the Financial Times.

Interested by the company’s technology — it was never involved with work on the deposit — Anglo took a 10 per cent stake in Nautilus back in 2006, which it later increased to 11 per cent.

As Nautilus has raised money to develop the Solwara project, 1.6km below the surface of the Bismarck Sea, Anglo’s shareholding was diluted down to 4 per cent. It is that interest it is now looking to exit.

“In terms of financial and reputational risk, Anglo American have chosen a good time to be exiting,” said Andy Whitmore of the Deep Sea Mining Campaign. “But for Nautilus it looks like it could not have come at a worse time, and may well be the final nail in the coffin for this dangerous experiment”.

Environmental campaigners have slammed the project, which is proposing to use three robotic machines weighing up to 310 tonnes to mine copper and gold from extinct hydrothermal vents on the ocean floor. Nautilus then wants to mix the ore with seawater to create a slurry, which can be drawn to the surface, stored and then put on other ships for transport. The extracted seawater is then pumped back to the seabed.

The Deep Sea Mining Campaign came says the project has been “questionable” from the start with independent reviews highlighting flaws in Nautilus’s environmental impact statement.

The underwater vehicles it wants to use were assembled in the north-east of England and have huge spikes like medieval cudgels that can tear through rock.

Nautilus, which counts Metalloinvest, Alisher Usmanov’s metals group, as its second biggest shareholder, warned last month that production from Solwara, originally scheduled for the third quarter of 2019, had been pushed back.

It cited delays securing the remaining project financing and a production vessel for the setback.

Nautilus claims Solwara offers the prospect of extracting high grade minerals without the large overheads and long timescales of land-based mining.

The company’s share price has slumped 94 per cent over the past seven years and it is now valued at just over $100m. Nautilus could not be reached for comment.

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New $10Mil Vatukoula Shaft Ready Next Year

The two cable drums used in the construction of the new Dolphin Shaft. Photo: Charles Chambers

Site preparation is well under way, official groundbreaking ceremony is expected to take place on May 8.

Charles Chambers | Fiji Sun | 29 April 2018

A new ventilation and haul­age shaft is under construc­tion by Vatukoula Gold Mines.

With an investment of $10 million it is expected to be completed early next year.

The new 700 metres deep Dolphin shaft is being constructed with the main aim of providing better ven­tilation for the mine’s Philip Shaft.

This will be the first such shaft sunk at Vatukoula since the Philip Shaft was constructed by the for­mer Joint Venture between Emper­or Gold Mining and Western Min­ing in the mid 1980s.

The project, besides being planned to improve ventilation and working conditions for the Philip Shaft, will also see the opening up of new ar­eas for mining.

Although site preparation is well under way, the official ground­breaking ceremony is expected to take place on May 8.

The company’s Surface Project Manager, Onisimo Fonmanu, said the site was also where an old shaft was in the 1980’s.

“The shaft then was only about five levels deep which was around 160 metres.”

With the new shaft expected to be around 700 metres deep, the com­pany has hired expert contractors from China to carry out the project.

The shaft main purpose would be similar to that of an exhaust venti­lator.

Mr Fonmanu said: “The Philip shaft needs more air flow than what it currently has.

“This project is aimed at rectify­ing that,” Mr Fonamanu said.

A tunnel will be dug from the Phil­ip shaft to join with the Dolphin shaft and this new line will be used to suck the air out of Philip Shaft.

“Once it does this then the airflow will be much better and it would also be cooler too for the workers who work there.”

Mr Fonmanu said the work pres­ently being carried out at Dolphin shaft was a term called ‘shaft sink­ing.’

The work had to be done care­fully as while the shaft was getting deeper, they had to be careful of the sides not caving in.

“It is a project which has to be done carefully as we have people who will be working below as the shaft deepens.”

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Geopacific kicks off Woodlark DFS in PNG

Geopacific Managing Director Ron Heeks (left) on site in PNG

Matt Birney | The West Australian | 10 April 2018

Aspiring gold producer Geopacific Resources has kicked off its Definitive Feasibility Study for the Woodlark Island project in PNG and all things being equal, should have the completed document on the street by the third quarter of this year.

The DFS follows on from the company’s encouraging Pre-feasibility Study results, which were announced in March, after an extensive work program throughout 2017.

The PFS supports the development of a conventional open pit operation delivering an average output of 100,000 ounces of gold annually for at least 10 years, with an all-in sustaining cost to produce of A$1100 per ounce.

Exhibiting very simple metallurgy, a high gravity gold content, low striping ratios, lowish CAPEX and a post-tax payback of just over 2 years, the Woodlark project appears to be quite robust on paper

According to the company, the epithermal gold mineralisation at the project is amenable to bulk-style, low-grade mining, with large volume, shallow, open pits.

The breadth and rigour of the PFS document, particularly in relation to the estimation of mining costs and metallurgy, which were both done to DFS standards, has shortened the estimated completion time for the DFS.

The aim of the DFS is to finalise and optimise plant design and infrastructure, delivering capital costs to within a 15% level of accuracy.

Importantly, the project sits on a granted mining lease and is already fully permitted, which means that things could move quickly for Geopacific after the DFS is churned out.

Woodlark also has solid regional exploration potential to grow beyond the global mineral resource of 1.58 million ounces, providing an element of blue sky for the 100,000 ounce a year project.

A number of key, near-mine brownfields areas have the potential to materially add to the mine plan at Woodlark, opening up further options for the operation, once in production.

Managing Director Ron Heeks said; “The PFS showed that Woodlark is a robust project that can surpass the critical production level of 100,000oz gold per annum. We see clear potential for upside from the Woodlark PFS estimates as well as significant exploration potential within close proximity to the current 1.1million ounce Reserve.

“Woodlark’s PFS outcomes see the project compare favourably to competing gold development projects on key metrics including the low forecast strip ratio and short post-tax capital payback.”

Heeks continues to put his family money where his mouth is too having recently waded into the market to pick up another 746,000 Geopacific shares in his wife and daughter’s name.

The company now holds a 92.75% interest in Woodlark via both its shareholding in Kula Gold, the project originator and its direct interest in the project, courtesy of a farm in agreement with Kula.

Geopacific is in good company in Papua New Guinea, surrounded by multi-million ounce gold deposits located on the country’s mainland and surrounding archipelago.

If the stars align for the company as expected, construction of the Woodlark project could commence in 2019, with first gold out by the middle of 2020.

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Another ‘World Class’ mining company disaster

The structure that caused the death of six Newmont Ghana staff

Newmont suspends all mining operations in Ghana indefinitely over deaths

GhanaWeb | 9 April 2018

Mining giant Newmont Ghana Limited has indefinitely suspended mining activities at all its sites in the country as investigations into the death of six of the firm’s subcontractor staff takes shape.

Six persons, all contractor employees of the construction services company, Consar Limited, died when the roof of a reclaim tunnel at the Ahafo Mill Expansion project, which is under construction, collapsed on them Saturday.

Two others who were with the six, escaped with minor injuries. They have since been treated and discharged.

The bodies of the six have since Sunday morning been retrieved from the tunnel, TV3’s Kwabena Adu-Gyamfi who is at the site at Kenyasi in the Brong Ahafo region reported.

Newmont, which commenced operation in Ghana in 2006 currently, operates two main mining sites at Akyem and Ahafo in the Eastern and Brong Ahafo regions respectively.

Following the Saturday freak accident, the company ceased mining operations at the Ahafo site in solidarity with the victims and their families as well as colleagues.

But at a meeting with the Minister for Lands and Natural Resources who visited the scene of the accident, acting Mines Manager at the Ahafo Mines, Okyere Yaw Ntram revealed the Akyem mine has also suspended operations.

“Our sister company in Akyem have also stopped operations. They suspended operation in solidarity with us until we resume back to work when the place is safe,” he told the Minister.

Though the suspension could potentially affect the production of the company and its revenue, Mr. Ntram told journalists “money is not of the essence now” as the company is focusing on empathising with the families and the employees.

“I think at this stage the important thing is to empathise with the deceased and their family and the communities and the employees that worked close with them,” he added.

What caused the accident?

The cause of the accident is yet to be established but it is suspected to be the result of a structural defect.

Fresh concrete that was being cast on the roof of the tunnel collapsed on the eight-member crew working in the tunnel at the time, thus trapping them in the process.

Initial attempts by some other workers around to rescue them from the mortar proved futile “due to the extremely large quantity of the mixture”, one of our correspondents reported.

John Peter Amewu, minister for Lands and Natural Resources who visited the scene Sunday morning blamed the accident on a “complete structural failure”

Though he said investigations are ongoing, he said, “It is clear that the props that support the slabs probably might not be well placed and that could trigger… the surface slab to cave in; over 1000 cubic metres of concrete”.

Investigations

Meanwhile, the Minerals Commission has been commissioned to lead the investigations into the accident.

It will have about two weeks to present its findings on the accident.

The accident scene has been taken over by the Minerals Commission , which is expected to among other things, establish what really happened and whether there were any breaches of safety regulations.

The investigative team is also expected to go into the structural design of the facility which collapsed to establish whether the roof was designed to take the about 1000 cubic metres of concrete.

Any sanctions against Newmont?

Mr. Amewu noted it was early to be talking about sanctions against the mining firm, which he said, is one of the mining companies in the country that is very concerned about high safety measures.

However, he said, “If negligence are detected, the law is there, and the law would have to be applied.”

“From what we are hearing if it is true that they asked workers to go beneath to find out what is happening because they detected that some structural unsoundness happened so the workers had to come down. If that is true, then actually something wrong might have happened” he said but added he wouldn’t want to pre-empt the outcome of the investigations.

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