Tag Archives: Kalia Resources

The Horse Breeder, the Novelist and the $60 Billion Panguna Mine

Panguna. RNZ/Johnny Blades.

Aaron Clark | Bloomberg News | January 27, 2020

John Kuhns has been many things: an investment banker, a silicon smelter operator in China and a novelist. His sights are now set on an abandoned mine with an estimated $60 billion of gold and copper.

Kuhns is among a handful of people exploring for minerals and courting landowners on the Pacific island of Bougainville. His rivals include an Arabian-horse breeder, a hedge fund investment manager who keeps wallabies on his estate and a former Australian defense minister.

The involvement of such an eclectic mix of entrepreneurs is a reflection of the fact that this is no ordinary mineral reserve. Rio Tinto Group operated the Paguna mine for 17 years through subsidiary Bougainville Copper Ltd. The global mining behemoth shut it in 1989 as local protests over mine revenue degenerated into a civil war that killed as many as 20,000 people.

The mine has been in limbo ever since. But that may be about to change as the Autonomous Region of Bougainville moves toward independence from Papua New Guinea after a referendum showed an overwhelming majority of the population on the small group of islands wants to establish a new nation.

While the political uncertainty may deter major mining companies from making an immediate investment, the mine’s riches attract entrepreneurs hoping to develop the asset to a point where they can deliver it to a big operator for a fee, said Peter O’Connor, a Sydney-based analyst at Shaw and Partners Ltd. “They have to create a story with a vision,” he said.

Success will depend on earning the trust of thousands of poor, customary landholders, many of whom remember the civil war that was triggered by communities demanding greater compensation from the mine.

“The landowners want to reopen the mine but they are divided by the interested developers,” said Sam Akoitai, a member of the island’s parliament who represents central Bougainville, an area that includes Panguna. “It’s really up to the landowners to come together to understand that the land belongs to the clan and not to some individuals.”

Bougainville Copper, which is no longer associated with Rio, has estimated it would take seven to eight years and $5 billion to $6 billion to rebuild the mine and resume full operations. The company is blamed by many locals for contamination attributed to the mine.

“We retain strong levels of support among customary landowners within the project area,” Bougainville Copper said in a statement. “We have a trusted local team on the ground that continues to engage with project area communities.”

The Bougainville Mining Act 2015 strengthened landowner control and was designed to increase compensation to local communities and the island’s government from future mining to avoid a repeat of the bloodshed of the 1980s and 1990s. The government also decided not to renew Bougainville Copper’s exploration license, which the company is challenging in court.

In June 2019, Kuhns flew several landowners to the U.S. to meet potential investors, including representatives from Barrick Gold Corp. At the Harvard Club in Midtown Manhattan, where stuffed moose, bison and even an elephant head adorn the rooms, the landowners heard Kuhns deliver a PowerPoint presentation introducing potential investors to Bougainville.

Barrick declined to comment.

“Panguna mine can be rejuvenated and can be resuscitated for a couple of billion dollars,” said Kuhns in a follow up phone interview. “It’s going to take a major to do that.”

Among those also interested in Panguna is Jeff McGlinn, who made his fortune in mining and construction services through Western Australia-based NRW Holdings Ltd., which he co-founded. McGlinn, who resigned from NRW in 2010, is part of the glamorous world of Arabian horse breeding, mixing with models and celebrities at parties on the French Riviera and promoting luxury brands. He once gave an Arabian colt to Italian opera singer Andrea Bocelli.

McGlinn’s roots in mining give him valuable experience for Panguna — one of NRW’s businesses was constructing dams that hold mining waste. He’s also linked to a recent effort by the island’s government to kick start development, when it created Bougainville Advance Mining. The government’s Executive Council proposed last year an amendment to the 2015 mining act that would give all available mining rights to the new company, in which McGlinn’s Caballus Mining would hold a stake.

That amendment drew criticism from landowners, as well as Bougainville Copper, the former mine operator, which says the proposal undermines its rights to mine Panguna. The bill was later shelved. A representative of Caballus said McGlinn was unavailable to comment.

Another interested party is Richard Hains, son of the Australian billionaire David Hains. Richard, famous for keeping wallabies on his Gloucestershire estate, has helped develop mines in some of the world’s most difficult places. He’s the largest shareholder of RTG Mining Inc., whose management team has financed, built and operated mines across Africa and Asia, including the Boroo gold mine in Mongolia.

“Some of the best opportunities in the mining business in the 21st century are now in the more difficult commercial environments,” Hains said in a phone interview.

RTG believes it can restart production at Panguna through a staged process in as little as 18 months for about $800 million.

“It’s far smarter to start with a smaller footprint,” said RTG Chairman Michael Carrick. “Then in consultation with the community, we can turn up the mine’s operation.”

RTG operates a joint venture with the Special Mining Lease Osikaiyang Landowners Association, a Panguna landowners group. The JV employs 15 people, including Philip Miriori, the chairman of the landowners group.

There are bigger fish too. Fortescue Metals Group Ltd. said in an emailed statement it has sent representatives to Bougainville to learn about the region and potential opportunities, confirming earlier reports. Founder Andrew Forrest is Australia’s second-richest person with a $10.2 billion fortune, according to the Bloomberg Billionaires Index.

Shaw and Partners’ O’Connor said Chinese miners may also have a chance of redeveloping Panguna because they have a greater risk appetite and access to cheap financing.

But the Panguna landowners group Chairman Miriori said the people he represents aren’t interested in working with Chinese developers because of their poor environmental track record.

If anyone wins the right to develop Panguna or other parts of the autonomous region they will need to do so cautiously. Violence remains a constant threat in a community that is still fiercely divided.

A geologist working for Perth-based Kalia Ltd. was killed and seven others were injured in an attack in northern Bougainville in December, according to the local government and the company, whose chairman is former Australia Minister for Defence David Johnston. Authorities subsequently suspended Kalia’s exploration expeditions and geological field work.

There’s also a moratorium on work at Panguna because of sensitivity to restarting the mine, said Raymond Masono, Bougainville’s vice president and minister for mineral and energy resources.

“We are no longer talking with any investors about Panguna until the moratorium is lifted, and we don’t know when” that will be, he said by phone. “The government is treading very carefully on this particular mine.”

But prospects for restarting Panguna and allowing for the development of new mines are bolstered by the idea that Bougainville would need revenue to have any chance of financing an independent state. Many hope the mineral wealth could ultimately help reduce poverty for the region’s 300,000 people where estimated per capita GDP is only about $1,100.

That would depend not only on clearing the way to restart production, but a government able to make sure that enough of the proceeds are used to fund development. “Given the failure of mining in PNG to deliver really anything like sustainable development, those hopes may end up being disappointed,” said Luke Fletcher, executive director of Jubilee Australia, a group that has tracked the effect of resource extraction.

But the lure of riches mean miners aren’t likely to give up.

“Bougainville had almost no exploration for nearly 40 years,” said Mike Johnston, executive director of Kalia. “There’s no other place like it on the planet.”

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Geologist killed in North Bougainville – govt

Momis: “The company has miserably failed to address its social issues and to fulfil its corporate social responsibility”

Radio New Zealand | 17 December 2019

A geologist has been killed in Bougainville by what the autonomous Papua New Guinea region’s president describes as a group of “criminal thugs”.

The victim, Terry Win Kilya, from Enga Province was an employee of Kalia/Toremana Joint Venture Limited, which has been conducting mineral exploration in a disputed area.

A statement on the death of its employee by the ASX-listed Kalia Group Limited said the geologist “received fatal injuries in a fall whilst undertaking field work on the company’s Mt Tore tenements around mid-day yesterday (Monday)”.

But Bougainville’s President John Momis has linked the death to criminal elements in an area where tensions exist due to unresolved social problems related to the mining exploration work.

He said it was deeply regrettable that a talented and experienced geologist, who came to the region to share his skills and expertise, had been killed.

“Bougainvilleans have spoken in the referendum vote that we want to be liberated and free to charter our new path ahead, but this sort of unnecessary incident is disheartening,” Mr Momis said in a statement.

Mr Momis extended an apology and his condolences to Mr Kilya’s family and the people of Enga Province on behalf of the people and government of Bougainville.

Bougainville President John Momis Photo: supplied

A reconciliation payment or ‘bel kol’ of $US28,633 has been paid to the victim’s family to help with funeral arrangements.

“In our Melanesian way and culture, we want to truly say sorry to the people of Enga and the family of the late Terry Win Kilya by extending our ‘bel kol’ assistance to late Terry’s family,” he said.

In its statement, Kalia said it was working with local police and officers of the Department of Minerals and Energy Resources “to determine the full circumstances relating to the incident”. The company did not mention an attack or criminal elements in its statement.

However, Mr Momis has expressed disgust at the employer for allowing its personnel to venture into the area where the incident occurred, knowing full well that there were criminal elements resisting exploration there.

Mr Momis had ordered the indefinite suspension of the company’s exploration licence and called for it to explain why such an avoidable tragedy was allowed to occur.

“The company has miserably failed to address its social issues and to fulfil its corporate social responsibility as a client of the ABG,” he said.

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Failed Nautilus CEO resurfaces in Bougainville

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

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

Board moves boost Kalia Bougainville copper/gold play

Matt Birney | The West Australian | 25 July 2019

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Watch this space for developments.

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CONTROVERSIAL MINING DEAL THREATENS BOUGAINVILLE UNITY AND REFERENDUM

Politicians with military background and connections get mixed up in a mining bid Arawa, Autonomous Region of Bougainville, Papua New Guinea

Chris Baria | February 11, 2019

There is a public outcry in the Autonomous Region of Bougainville, Papua New Guinea, over the introduction of three controversial mining bills including a bill to make amendments to the current Bougainville Mining Act (BMA) 2015, which ostensibly will strip the landowners of their rights and ownership of the mineral resources, whilst bypassing safeguards, protections, procedures for the landowners.

The amendment bill is also said to contravene Sections 23 and 24 of the Bougainville Constitution that protects rights of Bougainvilleans and recognizes traditional and customary laws and leadership in the mine affected communities. The Autonomous Bougainville Government (ABG) President John Momis has been convinced by Jeffery McGlinn a little known Australian businessman whose business appears to be dealing in heavy equipment for the mining industry and breeding exotic horse breeds. 

The lack of substantial experience of Mr McGlinn in mining industry has not deterred President Momis from giving his full blessings to a mining proposal by Mr McGlinn’s mining company“Caballus” recently registered in the British Virgin Islands. The proposal which is over simplistic and unrealistic includes the draconian amendments to the BMA and the establishment of a “Special Mining Entity” which has been named “Bougainville Advance Mining” (BAM) and the establishment of “Bougainville Advance Trust Holdings” which will take charge of revenue earned from mining.

What is disturbing about the whole affair is this:

1. Proper Parliamentary procedures and mining requirements were not met by the President and ABG to accept the Caballus as a partner in a mining company, BAM which also has been registered by Jeffery McGlinn already.

2. No consultations with landowners were sought to satisfy the “free, prior, informed consent” (FPIC) which has become a standard requirement in the establishment of any large extraction industry. Instead the proposals by Jeffery McGlinn were bulldozed through and bills are now at first reading with everything happening so fast. 

3. ABG and President Momis wrongly believe that that the USD$150m that Caballus would raise if its proposal was given the nod would go to ABG as spending money for referendum and other matters. However, these according to Jeffery McGlinn are what start up costs amount to and first part of it would be expended on several due diligences studies on the mineral asset at Panguna. 

4. The proposal by Jeffery McGlinn bears uncanny resemblance and appears to be a blueprint of a leaked document purportedly written for ABG by former Australian Defence Minister David Johnston who is also Western Australian like Jeffery McGlinn. Shortly, after receiving the report, President Momis cancelled BCL’s renewed bid to obtain mining licenses to reopen Panguna because according the report by Johnston which was written in 2017 “BCL had lost it’s social license”.

All in all, there appears to be a serious breach of the Bougainville Peace Agreement by meddlesome politicians Belden Namah connected with Caballus and former Australian Defense Minister, David Johnston, both with military background, according to some may well be acting in the interest of their respective governments in a deliberate attempt to undermine Bougainville’s referendum and it’s bid to gain independence from Papua New Guinea.

David Johnstone is currently the Chairman of Kalia Mining Limited which is carrying out mineral explorations at Mt Tore also in the Autonomous Region of Bougainville.

The move by Momis to install Caballus as a partner in a“pre-fabricated” mining company which is to be authorized through bills drafted on Australian soil by lawyers for Caballus has taken many ordinary ABG members by surprise and shocked by Mr McGlinn’s presence in the chamber which is out of bounds to foreigners and business dealings.

Members of ABG stand divided over mining issues centred around Caballus, with some members furious over what they view as attempts to amend BMA 2015 for Caballus’ own interests.

The Chairman of Panguna Special Mining Lease Osikaiyang (SMLOLA), Mr. Phillip Miriori has called on both Australian and Papua New Guinea governments to allow the due processes set out in the Bougainville Peace Agreement to achieve their aims and goals of peace, unity and security in the region by not allowing corporate interests in mining and other resource extraction to interfere with such processes by dividing up the people through payment of bribes and accosting ex-combatant support with a view to suppress ordinary people’s right to speak out and exercise their rights.

“We are not opposed to investors seeking investment opportunities here but they must abide by our laws and show respect to our government and not try to manipulate our laws to suit their own interests”, Mr Miriori said.

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Four Mining Exploration Licences Issued for Bougainville

“Bougainville is open to any investor who want to come and do business”

Post Courier | February 18, 2018

Secretary for Bougainville Mineral and Energy Resources Shadrach Himata says a total of four mining explorations licences have been issued to date.

Mr Himata said companies from Australia, Canada, and the Philippines have taken up interest in the exploration of various areas in Bougainville upon the request of landowner groups.

“We have a company from Australia, Canadians interested, and the Filipinos who are interested in exploration,” Mr Himata said.

“Right now we have issued four exploration licences in the Tore area in North Bougainville and the Central Bougainville is the Isina area.

“The Filipino company, SR Metals, are interested in doing exploration in the eastern part of Isina area in Central Bougainville.”

He said on the northern part of the Tore area, Australian company, Kalia Resources, is carrying out exploration.

“I guess Bougainville is open to any investor who want to come and do business with us,” he said.

“Potentially Bougainville is a highly mineralised region, but what we are doing at the moment is we are looking at areas that the people themselves want exploration to take place, then we open up those areas.

“Basically the entire Bougainville region is under what we call a moratorium. Only areas where people are willing to give up their land for exploration, then the government will facilitate.”

He said for Panguna, the government gave the first right of refusal to Bougainville Copper Limited, but through the process the people and the government felt it was risky to allow BCL to develop the mine or pursue exploration.

“They have decided not to renew the exploration licence and put the area on reservation.

“Apart from Panguna we have also opened up other economic areas on Bougainville with mineral exploration, with the hope that we will find a major resource to process to development.

“We are betting on current exploration companies on the ground right now. Again you never know how long exploration takes. It may take five years or even 10,” he said.

“If we find something earlier the better, but we still see Panguna as an actual mine and it is easier to develop Panguna than other areas.”

He said although Panguna has been put on reserve, it is still on the radar in terms of an economic impact project for Bougainville.

“The key is unity of the people, that is why we are putting the brakes a bit. When they are ready they can come back to the government with one voice and we can decide what is the best method going forward.”

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