Tag Archives: Frieda river mine

Chan globetrotting puts Frieda back in the frame

Chan visits Laos mine

Post Courier

MINING Minister Byron Chan is in Laos to see PanAust’s operations at Phu Kham and Ban HouayxaHe was accompanied by Mineral Resource Authority acting managing director Philip Samar and Highlands Pacific chief executive, John Gooding.

image001Minister Chan was greeted by PBM chairman, Mr Chanpheng Bounnaphol, senior Lao staff and PNG nationals working in Laos as highly skilled expatriate workers. PNG’s long mining history has developed significant talent in the fields of engineering, geology, mine planning and trades. PNG nationals are now finding their way into all corners of the international mining industry and training counterparts in new mining destinations such as Laos.

“It was encouraging to see so many familiar faces from PNG working abroad, especially in a country so remote from PNG. The fact that they are building the skills of the local people and imparting knowledge gained in PNG’s world class mining operations show the strength of our local industry,” said Chan.

The delegation took the opportunity to visit the village of Ban Nam Gnone and discussed PanAust’s approach to sustainability, environment and community development. A full briefing was provided on the approach to tailings storage, water management and relations with the neighbouring communities.

During the visit, Chan called on his Lao counterpart, Soulivong Daravong, Energy and Mines Minister. They exchanged information and experiences of managing the industry.

The discussion furthered the bilateral relationship and enhanced cooperation between the two countries.

PanAust is looking to develop the Frieda River project in Sandaun Province, in conjunction with future joint-venture partner Highlands Pacific.

The Frieda River project is a priority project for the Government of PNG and the provinces of Sandaun and East Sepik.

“PanAust is excited to host the Minister of Mines, MRA and Highlands Pacific. We are proud of the ongoing achievements of our mines in Laos. The operations continue to deliver to plan and our workforce is now truly global. This is the approach we will take to developing a world-class operation at Frieda,” said Mr Richard Taylor, PanAust general manager external affairs.

Mr Gooding welcomed the opportunity to look at PanAust’s operations at both Phu Kham and Ban Houayxai and was looking forward to working with PanAust.

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Xstrata issue clarified

Gynnie Kero | The National aka The Loggers Times

THE sale of Glencore Xstrata’s share of 80% in the Frieda River project to PanAust is subject to a couple of conditions yet to be reached, Highlands Pacific managing director and chief executive John Gooding said.

Gooding was reacting to speculation that the Beijing-ordered sale by Glencore Xstrata of its US$6 billion (K14.5 billion) Las Bambas copper project in Peruis has placed PanAust, Highlands Pacific and Indophil on high alert.

As reported in The Australian recently, the sale of Las Bambas as a condition of Chinese approval of last year’s merger between Glencore and Xstrata – affected the plans of all three companies in their multi-billion-dollar copper-gold projects in PNG (PanAust and Highlands) or in the Philippines (Indophil).

Gooding said: “When Glencore and Xstrata wanted to merge last year, they had to get approval from respective countries in which they both operated.

“While receiving approval from European Union countries and others, the Chinese Ministry of Finance and Commerce (MOFCOM) required that Las Bambas, a new big copper mine being developed in Chile by Xstrata at the time, be sold by mid next year before they would agree to the merger.

“If  an agreement for the sale of Las Bambas was not signed by mid-year (2014), then the Chinese had the right to decide whether another of the copper projects in Xstrata’s stable including Frieda River, would be sold instead.”

Gooding said the whole merger of Xstrata and Glencore seemed to be contingent on the sale of Las Bambas or another of their copper projects.

“We believe that the sale process for Las Bambas is fairly mature and will be consummated in the not too distant future from what we read.

“Once Las Bambas is sold (probably to a Chinese company). then the merger of Xstrata and Glencore should become unconditional as it would satisfy MOFCOM’s requirements, and then so does the sale of Frieda River to PanAust become unconditional.

“In the meantime if MOFCOM approves the sale of Frieda River to PanAust first then that also would be very good for all the stakeholders in Frieda River and the people of PNG as it reduces any uncertainty with regards to timing.

“We are very confident that the sale process of both Las Bambas and Frieda River is robust and that PanAust will be very good partners as they have the track record and capability to deliver this world class project,” Gooding added.
Highlands Pacific owns 20% share in the Frieda River gold and copper project located on the border of Sandaun and East Sepik provinces.

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Glencore’s Las Bambas sale puts Aussies on alert

Barry Fitzgerald | The Australian

SPECULATION that the Beijing-ordered sale by Glencore Xstrata of its $US6 billion ($6.7bn) Las Bambas copper project in Peru is imminent has placed ASX-listed companies PanAust, Highlands Pacific and Indophil on high alert.

The sale of Las Bambas — a condition of Chinese approval of last year’s merger between the London-listed Glencore and Xstrata — affects the plans of all three companies in their multi-billion-dollar copper/gold projects in Papua New Guinea (PanAust and Highlands) or in The Philippines (Indophil).

Merrill Lynch last week tipped that the sale of Las Bambas would be announced “any day”, with the market continuing to have Hong Kong-listed and Melbourne-managed MMG as the most likely buyer in a deal.

Its 72 per cent owner, China Minmetals Corporation (Minmetals) is one of China’s biggest multinational state-owned enterprises.

MMG is best known in this market for acquiring the assets of OZ Minerals other than the Prominent Hill copper-gold mine in South Australia, when it was forced into a drastic debt restructuring in 2007.

MMG’s operations include the Century zinc mine in Queensland, the Rosebery zinc operation in Tasmania and the Golden Grove base and precious metals mines in Western Australia.

MMG would not comment on the Las Bambas speculation on Friday.

MMG does not have the financial capacity to take on Las Bambas itself but Minmetals does, thanks to access to Chinese import/export financing.

MMG also recently deferred a development decision on its $US1.5bn Dugald River zinc project in Queensland.

In the meantime, PanAust, Highlands and Indophil are anxiously awaiting an outcome of the Las Bambas sales process.

In the case of PanAust and Highlands, the deal in which PanAust replaces Glencore in the proposed $US1.8bn modified development plan for the Frieda River copper/gold project in PNG hinges on Glencore meeting Beijing’s condition that it reaches agreement to sell the Las Bambas project before September 30 this year.

Should Glencore fail to complete the transfer of ownership by June 30 next year, the Chinese merger approval requires it put its 80 per cent stake in Frieda River up for auction.

PanAust has since struck a deal to acquire Glencore’s stake for $US75m as well as forming an alliance with the other partner, Highlands Pacific.

However, the deal remains conditional on Glencore meeting the Chinese condition on Las Bambas.

The Melbourne-based Indophil faces similar uncertainty, with Glencore also required to auction off its 62.5 per cent stake in the Tampakan copper/gold project in The Philippines should Las Bambas not be sold.

Glencore also owns a 13.1 per cent equity stake in Indophil. Indophil owns a 37.5 per cent interest in Tampakan.

Tampakan, like Frieda River, is one of the biggest undeveloped copper/gold orebodies in the world.

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New investor for Frieda welcomed by Somare

The National aka The Loggers Times

EAST Sepik Governor Sir Michael Somare has welcomed PanAust as the new investor in the Frieda River project.

Sir Michael met with PanAust external affairs general manager Richard Taylor early this month and was briefed on the agreement with Glencore/Xstrata to take a majority interest in the project.

The former prime minister urged the company to replicate the success and sustainability performance it had achieved in Laos.

He acknowledged that PanAust would have the advantage and the benefit of so many years of collective exploration data and the extensive drilling of the Frieda resources which is now very well understood, having a better definition of the resource and what the resource or ore bodies actually look like.

“There is little doubt that it is a fantastic resource and as such a fantastic opportunity for all those who will be involved in this project,” Sir Michael said in a statement.

The governor favoured the PanAust proposal to commence the project on a revised scale as this would improve the project economics and potentially reduce the impact of the project in the early stages.

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PNG needs to toughen up dealings with mining companies

Gabriel Ramoi | PNG Attitude

IT’S NOW OVER FOUR WEEKS since a Reuters’ report republished in PNG Attitude alluded to junior mining company Pan Aust Ltd buying a majority Interest in the Freida mine for about $US125 million. [A similar report in the Wall Street Journal put the value at $US75million.]

In my view, the orchestrated leak to the media could have been deliberately engineered by Pan Aust to pull the wool over the eyes of the PNG government and to execute a grab for cash not dissimilar to the Nautilus debacle.

The architect of this power play seems to be the same person who sits on the cross board of Highlands Pacific, Pan Aust and Nautilus.

When The National newspaper first carried this story at the beginning of November, I personally communicated with a handful of Cabinet ministers, including the acting Mining Minister Ben Micah, to alert them to the report and to point out the obvious – which is that the PNG government is a partner in Freida and has the right of first refusal in acquiring the interest of Xstrata–Glencore ahead of Pan Aust.

I asked them whether, as a matter of policy, the national government will hold on to its 30% equity in Freida or will it make a bid to increase its equity in the mine and whether Xstrata has informed the government of its decision to sell its interest in the mine to Pan Aust.

All the ministers were shocked and angry at this nose thumb to the PNG Cabinet by Pan Aust and said the company had treated the government and people of Papua New Guinea, and the Sepik in particular, with contempt in announcing a deal not sanctioned by the government.

The most glaring issue in the purported deal reached between Xstrata and Pan Aust is the figure placed on the value of the Xstrata interest in Freida.

First the amount outlaid by Xstrata to define the resources of Freida and Nena is now capped by Pan Aust at $US125 million when we know that since 2010 Xstrata spent no more than $US20 million each year on resource evaluation, and even then there were disputes between Xstrata and Highland  Pacific on the quality of the work carried out.

The figure of $US125 is questionable and should be subjected to independent audit should the government of PNG decide to purchase Xstrata’s interest in the mine.

While foreign investment is welcome in PNG, the manner in which Pan Aust has attempted to enter the resource sector is questionable. There are still many areas in PNG where Pan Aust would be welcome to secure exploration rights but these certainly do not include Freida which is a known and verified deposit ready for extraction.

It would come as little surprise to me if Pan Aust is merely a conduit for the sale back to the PNG government of the interest acquired from Xstrata, in the process enriching a number of deal-makers who may have colluded to pull a fast one on the government.

It is now up to the Prime Minister and the Minister for Mines to summon Xstrata forthwith to explain the nature of the arrangement with Pan Aust and for the government to advise Xstrata of its intentions relative to Freida.

It is also important for the East and West Sepik Provinces and their landowners to impress on the Prime Minister and the Minister for Mines whether they also want to hold equity in Freida. Their interest should be rated ahead of any interest expressed by Pan Aust.

The government has before it a unique opportunity to take a 100% controlling interest in Freida as Xstrata exits the project so the government can maximise its income from Freida to meet the development needs of the nation.

It is estimated that the development of Freida will cost $5.6 billion and the PNG government is capable of raising 100% of this using a number of financing models available to it. For example, it can enter into a production sharing agreement with a known contractor to mine Freida on its behalf for a fee.

The government is also now better placed to utilise export credit financing to get Freida off the ground and does not need little companies like Pan Aust to run rings around it. This year alone we have witnessed Nautilus Minerals trying the same trick on the PNG government.

Obviously the view that everything in PNG is available for a price is attracting  the wrong  kind of resource companies who use local compradors to deprive the nation of its resources and wealth.

It is now time for the government to take control of the wealth of the nation and to tell companies such as Nautilus to fund their own operations or, in the case of Pan Aust, apply for new exploration areas to locate and develop new deposits.

This view is in no way a commentary on the debate between economic nationalism and economic rationalism. On the contrary, it aims to prevent economic mercenaries praying on an unsuspecting government and people.

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Four new mines in 10 years

The National aka The Loggers Times

FOUR large mining operations are soon to come on stream in the next 10 years, Mineral Resources Authority (MRA) acting managing director Philip Samar revealed in his presentation during a media workshop on Saturday.

The new mining projects include Mt Kare (17km west of Pogera gold mine), Yandera in Madang, Frieda project at the border of East and West Sepik provinces and Walfi-Golpu project in Morobe.

Mt Kare project is owned and operated by Indochine.

Samar said Mt Kare was undergoing feasibility study, which was expected to be  completed by middle of next year.

“The projected mine life of Mt Kare project was between five and eight years with commercial production to commence in 2016.

Marengo Mining Ltd is the developer of the Yandera project.

Samar said the feasibility study had been completed for submission to MRA.

The mine had an expected life more than 20 years and it would be producing copper and molybdenumby 2017.

Frieda River copper-gold project’s owner Glencore Xstrata had indicated opting to sell Frieda.

The project was on the market and PanAust was in discussions to finalise a deal.

Brisbane-based PanAust, a company with mining interests in Laos, Thailand and Chile, had agreed to acquire an 80% stake in the project for US$79 million (K205 million).

PanAust had planned to develop a mid-sized operation unlike Xstrata, that was planning large scale.

PanAust feasibility study was expected to be completed in 2015 with production anticipated in 2018 or 2019.

Frieda project was projected to have a mine life expectancy of more than 20 years.

Samar said Wafi-Golpu exploration project was a joint venture of Harmony Gold of South Africa and Newcrest of Australia with 50% stake each.

The Wafi-Golpu project had current resource estimate of nine million tonnes of copper and 26.6 million ounces of gold with gold equivalent of 74 million ounces and forms one of the world’s major gold deposits.

Samar said: “Current indications are that this project has the potential to be another Ok Tedi or Panguna-sized operation with an expected mine life of 20 plus years.”

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Maru: Mining projects to boost Sepik

The National aka The Loggers Times

THE two mining projects in the Sepik provinces will bring maximum benefits, Minister for Trade, Commerce and Industry Richard Maru  said..

The Freida River mine at the border of West Sepik and East Sepik and the recently explored Alexander Mine, East Sepik, had drawn excitement from among the people of the two provinces.

Maru, who was in Wewak recently, said Alexander mine was now in its third phase of exploration.

“We are just waiting for three drills to be put in the respective locations.

“Two drills to be put at West-Yangoru and one at Ulupu, Marprik,” Maru said.

“In Sepik, we are looking forward to one of those two major mines.” Alexander Mining Ltd, the PNG-registered Canadian-owned company, was issued an exploration licence early last year to work in the Prince Alexander range.

Exploration licence (ELA 1857) was approved by Mining Minister Byron Chan and was presented to James Das, the managing director.

The company was to begin exploration in the licence area extending from Wamaina in Yangoru to Nagipaim in Maprik.

The site was known for its activities in alluvial mining and holds the potential to host some high grade gold and other minerals.

Maru said he was informed that there may have already been a buyer for Frieda project.

He said it is about time the Sepik provinces started to contribute to the country’s economy.

“We can’t just be recipients and only contribute politically … we have to give real economic contributions to this country as well,” Maru said.

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PanAust sees PNG project transforming it into top copper producer

Reuters

Australia-listed miner PanAust Ltd said its acquisition of an exploration project in Papua New Guinea from Glencore Xstrata could transform it into one of the world’s top independent copper producers.

PanAust has a market capitalisation of A$1.17 billion ($1.11 billion), dwarfed by a $24 billion capitalisation for Southern Copper Corp, the biggest independent copper producer.

But the Australian miner is benefiting from moves by big mining companies to sell off undeveloped assets and tighten their belts after a cooling of the commodities boom.

PanAust last week agreed to buy 80 percent of the Frieda River copper project in Papua New Guinea from Glencore Xstrata for $125 million.

It expects to spend between $1.5 billion and $1.8 billion to develop a mine initially producing only 100,000 tonnes of copper annually — mid-sized by sector rankings.

Less than a year ago, Xstrata put the capital spending estimate for Frieda River at $5.6 billion.

Xstrata had big plans for Frieda River, which was being designed to yield 300,000 tonnes of copper a year ahead of a decision to merge with Glencore and trim down via asset sales.

The merger was completed in May 2013.

If PanAust reaches the scales envisioned by Xstrata, it would out-produce many of the world’s biggest mines, including BHP Billiton’s Olympic Dam lode in Australia.

Xstrata invested more than $250 million in Frieda River and the work undertaken should help PanAust meet its initial production targets.

PanAust agreed to buy the project only after determining it could be developed on a smaller scale, according to Managing Director Gary Stafford.

“Because it is such a big resource, there will be opportunities to build the business and leverage off that world-class scale deposit,” Stafford told reporters.

PanAust is one of only two companies mining copper in Laos.

It has set an annual production target of 90,000 tonnes of copper in concentrate in Laos in 2018, up nearly a third from the 62,000-65,000 tonnes it expects to mine this year from its Phu Kham deposit.

Under a five-year plan, PanAust could be the world’s sixth-largest independent copper producer immediately behind Kazakhmys, Kazakhstan’s biggest copper producer, according to Stafford.

Stafford said he was undeterred by concerns of flickering resource nationalism in Papua New Guinea.

PanAust reached the deal with Glencore Xstrata within weeks of Papua New Guinea’s parliament passing laws allowing the government to take full ownership of the neighbouring Ok Tedi copper mine.

After meeting with Prime Minister Paul O’Neill and discussing Ok Tedi, Stafford said he was convinced Papua New Guinea wasn’t threatening foreign investors.

“I was happy with his explanation and in that context it was a one-off,” Stafford said.

Once the deal is concluded, PanAust will own 80 percent of Frieda River and Australia-listed Highlands Pacific 20 percent. The Papua New Guinea government has a right to acquire a 30 percent stake in the project.

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Analysts welcome PanAust takeover of Frieda River mine project

Business Advantage PNG

The entry of PanAust—a new player in Papua New Guinea’s mining sector—is good news for the giant Frieda River gold and copper mining project in East Sepik Province. The move has also been welcomed by analysts.

Since Glencore Xstrata indicated late last year that it wanted to get out of the project, there’ve been concerns for the future of what has been regarded as one of the world’s top ten gold and copper prospects.

Brisbane-based PanAust, a company with mining interests in Laos, Thailand and Chile, has agreed to buy an 80% stake in the project for US$79 million (K205 million). The other 20% will continue to be held by Australian junior miner, Highlands Pacific, a company with a strong history in PNG. As with all mineral projects, the PNG State has the right to acquire up to a 30% interest in the venture.

A ‘good deal’

UBS analyst Joe Battershill described the deal as ‘good for PanAust’.

‘PanAust places a lot of emphasis on sustainability and corporate governance’

It would take 12 to 18 months to complete the feasibility study and another two or so years to get production up and running, he told Business Advantage PNG, which fits into the company’s projected schedule.

It’s PanAust’s first foray into PNG, and Battershill says one of the strengths that the company brings to the country is its track record in Laos.

‘When they first went to Laos, there were very few Western countries operating there.

‘It was a difficult from a geopolitical perspective—the terrain, and unexploded ordinances—and what it has achieved there in the last 10 years is nothing short of significant for the country.

‘PanAust places a lot of emphasis on sustainability and corporate governance and I’d like to think it gives the PNG Government a sense it’s doing the right thing by local communities, the government, shareholders and the company.’

Massive project

The project is ‘one of the largest undeveloped copper and gold deposits in the world,’ according to a company statement, which also said Frieda River could produce 100,000 metric tons of copper and 160,000 ounces of gold a year and have a mine life of 18 years, and will need development capital of $1.5 billion to $1.8 billion.

These figures contrast somewhat with the more bullish December 2012 estimates from Xstrata Copper, which identified an estimated capital cost of $5.6 billion, and an estimated average annual production profile of 204,000 tonnes of copper and 305,000 ounces of gold, over a 20-year mine life.

‘From a strategic point of view, Frieda River provides us with the basis for growing production beyond our current mine life in Laos,’ PanAust Managing Director Gary Stafford said in an analysts’ interview. ‘It gives us another string to our bow.’

If the development is successfully completed, departing owner Glencore Xstrata will receive a two per cent royalty payment.

PanAust Profile

PanAust is an Australia-based S&P/ASX100 copper and gold producer
Market Cap: A$1,168 million
Employees: 3,320
Principal assets: include the Phu Kham copper-gold property and the Ban Houayxai gold-silver property located 100km north of the Lao capital Vientiane
It also holds a 60% share of the Inca de Oro copper-gold project in Chile through an alliance with Codelco.
Net first-half profit 2013: US$18.9m million (down 38%)
Expected earnings to December, 2013: between US$260 million and US$ 300 million.

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IPA should reject the offer by a junior player PanAust to buy a controlling interest in Freida

Gabriel Ramoi | PNG Blogs

There is an application pending approval at IPA for  junior  Mining Company Pan Aust LTD  to buy majority Interest in the Freida Mine for US$25 million. This development is unacceptable and the Prime Minister and the  Minister for Mines ,Commerce and State Enterprise must summon Xstrata –Glencore forthwith to explain the nature of the arrangement with Pan Aust Ltd  The Government of PNG  by law  has the right of First refusal to acquire the interest of Xstrata – Glencore and must outlay the US$25 million to take over the  controlling interest in Freida now and Develop the mine itself as it is now doing in OK Tedi and safe guard the wealth of the nation and  not allow Foreign Carpet Beggars to pull a wool over our eyes.

It is obvious  what is being schemed here.  Pan Aust Ltd is a company that is under Capitalised and is incapable of raise US$6 Billion which is the estimated development cost in bringing Freida Mine into Production without sovereign backing from the PNG Government. It is obviously a plot by pan Aust Ltd  to basically take over the sunk cost outlayed by Extrata and to on sell Freida back to the PNG Government  in the not too distant future for an exorbitant profit.

The  development cost of Freida is estimated to cost  $6 Billion and the PNG Government is capable of taking 100% Control of Freida and can use a number of Financing Models to get Freida into production and to ensure majority of the Profits remain in the Country to meed the critical social agendas of the Nation.  It can for instance enter into a production sharing Agreement or enter into a Mining Contract with a known Mine Contractor to mine Freida on its Behalf for a fee.

The PNG Government  is also now better placed to utilised export Credit Financing to get Freida off the ground and does not need  companies like pan Aust Ltd  to run rings around it.  This year alone we have witnessed Nautilus Minerals  trying the same trick on the PNG Government and now Pan Aust Ltd . Obviously the view that everything in PNG is available for a price seem to attract the wrong  kind of Resource Companies in recent times to enter PNG and using our  Local compradors to  scheme the nation of its resources.

It is now time for the Government to stand and take control over the wealth of the nation and to tell companies such as Nautilus and Aus Minerals to go and jump. Enough is Enough.

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