Tag Archives: Newcrest Mining

Lihir could yet be million ounce gold mine: Biswas

Newcrest Mining chief executive Sandeep Biswas says the leNewcrest chief Sandeep Biswas has stressed he is more interested in value rather than volume.

Newcrest chief Sandeep Biswas has stressed he is more interested in value rather than volume.

A million ounces of gold a year sounds great for Newcrest shareholders – but what about the poor people of New Ireland, left behind as the quasi-colonial mining companies ship their gold? 

Peter Ker | Australian Financial Review

The man leading the turn-around of Australia’s biggest gold miner, Sandeep Biswas, has not given up hope that the Lihir gold mine may yet fulfil its potential to produce a million ounces of gold in a year.

The Newcrest chief executive has in recent years improved output from the PNG mine, which Newcrest acquired for $10.5 billion of scrip in 2010.

Located in the caldera of an extinct volcano, Lihir boasts one of the world’s largest gold deposits and was supposed to be producing more than a million ounces per year by 2012.

But Lihir has never lived up to those expectations, with annual production never getting close and reliability issues prompting $5.6 billion of asset impairments over the past five years.

But improvements have been seen in the 30 months since Mr Biswas took the reins at Newcrest; mill throughput has risen at Lihir by close to 30 per cent, plant availability has risen from just over 70 per cent to more than 80 per cent while all-in sustaining costs of production have fallen from $1201 per ounce in the December half of 2013 to $830 per ounce in fiscal 2016.

Lihir produced a record 900,034 ounces of gold in fiscal 2016, and official guidance for fiscal 2017 has been set at between 880,000 ounces and 980,000 ounces.

Mr Biswas rarely speaks about gold production targets, preferring instead to guide investors towards more controllable goals such as the volumes of ore put through the processing circuit at Lihir.

But he told The Australian Financial Review that producing 1 million ounces of gold from Lihir in a year could yet be achieved.

“If you took the plant up to 15 million tonnes to 17 million tonnes grinding rate, as long as your [gold] grade was in the high 2 per cent [range] then yes, it’s possible to get over a million ounces,” he said in a recent interview.

For comparison, Newcrest was due to be grinding at about 13 million tonnes per year by the end of 2016, 14 million tonnes by December 2017 and 15 million tonnes per year within five years.

But while 1 million ounces per year would be a major milestone for Lihir, it does not appear to be a driving ambition for Mr Biswas.

The Indian-born executive stressed he was more interested in value rather than volume, and under his stewardship Newcrest is taking a lower-cost development approach to Lihir that has seen its gold production volumes rise more slowly than originally anticipated.

Plans to be producing 1 million ounces at Lihir by 2012 implied an early development of a high-grade gold deposit called Kapit, but Mr Biswas has delayed the development of Kapit and studied ways to do it more economically.

“With the work we have done on developing the Kapit ore body, we have saved $1 billion on capex minimum which they would have had to spend under that plan,” he said.

“We have pushed that back, by the time we get to Kapit it will be 2025.

“Yes it [Kapit] has better [gold] grades, but you don’t want to spend a billion and half dollars going to get it, we would rather spend $200 or $300 million, which is the current plan.” 

“When you look at how much gold you produce you also have to look at how much capex and what your operating costs are. I think we’ve got a much more sustainable model.”

Newcrest is expected to publish its December-quarter production results on  January 30, before revealing half-year financial results on February 13.

Mr Biswas is scheduled to give an address to the Melbourne Mining Club on February 9.

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Hidden Valley LO association urge Govt to sign revised Mining Act

Peter O'Neill announced his government's climb down in Sydney

Peter O’Neill announced his government’s climb down over the Mining Act in Sydney

Post Courier | December 15, 2016

THE government has been called upon to review their decisions and sign the revised mining act for implementation.

Hidden Valley’s Nakuwi Landowners Association president Rex Mauri said this yesterday following the announcement by Prime Minister Peter O’Neill during the mining conference in Sydney, Australia, recently to defer the revised mining act.

“We the landowners from Hidden Valley are appealing for Prime Minister Peter O’Neill and Mining Minister Byron Chan to review the decision,” he said.

He said Mr O’Neill had announced during the mining conference that the revised mining act will be deferred until after the 2017 General Election.

“This is a slap in the face for landowners, contributing individuals and entities efforts’ in compiling the act.

“This revised mining act is vital because once it is signed, then the benefits rollout will surely reach the affected host project communities and all stakeholders in the country.

“However, it is very frustrating and the deferral indicates that the PM is serving the interest of the developer and not the landowners of PNG.

“I have been actively involved in the operation of Hidden Valley mine for almost 34 years, yet I don’t experience any tangible developments occurring in affected communities of Morobe Mining Joint Venture, and the living standards of the people are still low,” Mr Mauri said.

He claimed that the gross payment of the mine is divided as two per cent belonging to the landowners which is shared among the national government, provincial government, local level government and landowners, while the developer is enjoying 98 per cent. Mr Mauri said that these are some issues that are highlighted and amended in the new revised mining act so the political leaders in mining provinces must support the call and raise their voice about the decision and ensure the mining act is signed and ready for implementation.

“We cannot drag this on as operations are continuing every day and changes are happening to our environment. Let us all voice our concern to ensure we benefit fully.”

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How the international financial vultures view Papua New Guinea

vultures

Lenders flag policy, infrastructure challenges to PNG mines

  • Need for ports, power, roads raises costs
  • Chinese banks boost miners’ access to money
  • Miners fear security risks, lenders undaunted

Sonali Paul | Reuters | 8 December 2016

Planned changes to Papua New Guinea’s mining laws are creating uncertainty ahead of an upcoming election, despite strong interest in proposed multibillion dollar mining and energy projects in the Pacific nation, lenders and advisers say.

The quality of the copper, gold and gas resources in the country mean there is appetite to lend to projects including Total SA’s Papua liquefied natural gas project, Guangdong Rising Assets Management’s (GRAM) Frieda River and Newcrest Mining and Harmony Gold’s Wafi Golpu copper and gold mines.

However Australia and New Zealand Banking Group and Credit Suisse bankers said uncertainty over elections in mid-2017 and proposed government mining and energy policies may affect the size and pricing of loans.

Planned changes include shortening mine leases to 25 years from 40 years, giving the state the right to acquire a project for half its sunk cost after the first phase, an increase in royalties to 3 percent and a doubling of the production levy to 0.5 percent.

PNG Prime Minister Peter O’Neill told a conference in Sydney he would not go ahead with any changes to the mining law ahead of national elections in June 2017, and would await a new mandate in parliament.

But the uncertainty is putting pressure on the nation’s sovereign rating, which would affect lending terms.

“When we assess the risk and when we assign risk ratings to projects, to the extent that the sovereign rating is under pressure or downgraded, ultimately that translates to a higher cost of funds to the borrower,” said ANZ’s head of mining and resources infrastructure project and export finance Wai Mun Lum.

The PNG Chamber of Mines and Petroleum has warned that the proposed mining law changes could make the Frieda River and Wafi Golpu projects unviable.

INFRASTRUCTURE CHALLENGES

The main attraction of Papua New Guinea is the sheer size of the deposits, which are tucked away in remote, mountainous regions with limited infrastructure.

“I talk to investment banks, and they’re all keen to remain on top of what’s happening in PNG. They see the opportunities, and they’ll all be there,” said Anthony Latimer, a partner at law firm Norton Rose Fulbright on the conference sidelines.

But in a country where the only airport with runway lights is in the capital, Port Moresby, lack of infrastructure poses a big challenge. For a company like ExxonMobil building the $19 billion PNG LNG project, a mammoth four-year task which it likened to constructing on the moon, that was doable.

ANZ’s Lum said for smaller companies like GRAM’s PanAust looking to build the Frieda River mine, it would be a bigger challenge to fund port and power facilities and an air strip.

However where western bankers fear to tread, China’s big banks are pouring in, bankers and advisers said.

“The recent joint venture between Zijin and Barrick for Porgera (gold mine) is going to be very good for PNG,” said Graham Smith, associate director of mining M&A at KPMG.

“We’re seeing the Chinese banks have a very different risk appetite than some of the western banks for jurisdictions such as PNG, as well as lower debt costs generally.”

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Zifasing community dispute MMJV claims of consent to Wafi-Golpu pipeline

harmony

newcrest

The Zifasing people in Morobe Province are accusing Harmony Gold and Newcrest Mining of lying over claims (see media story below) they have consented to the laying of a pipeline and access road for the Wafi-Golpu mine across their land. 

Kenn Mondiai

Another TWISTING of the TRUTH by the use of the Media !!!

The MAJORITY of the Zifasing Clans & Community never attended the MRA Warden’s Hearing on the 23/11/2016 (13:00pm) at Zifasing Ward 19 Wampar LLG regarding SML for Wafi Glopu to give their approval, they never agreed to the access road or the pipeline passing through their land. 

The gazetted location was “Zifasing Community Hall”, but there is no such place at Zifasing. The common and known traditional meeting place at Zifasing is the Community Meeting Place in the centre of village under the mango trees.

Instead the Warden’s Hearing was held outside and away at a Hall build by politicians far from the village centre (traditional meeting place) with a few people without ALL CLAN LEADERS & WARD 19 COUNCILLOR.

The Mining Advisory Council (MAC) should know the TRUTH !!!

Community agrees to pipeline proposal
Pisai Gumar | The National aka The Loggers Times | 25 November 2016
THE Zifasing community in Huon Gulf, Morobe agreed this week to let Morobe Mining Joint Venture (MMJV)* build an access pipeline through their land.
The pipeline from the interior Wafi-Golpu project site is anticipated to cross over the Watut and Markham rivers and run through clan land in Wampar before reaching the Lae main wharf.
Based on an MMJV mining engineering plan and the Mining Act section 108, Special Mining Lease (SML) 10 caters for mining easement 91 (ME 91) pipeline and mining easement 93 (ME 93) northern access road.
Zifasing village land mobilisation chairman Nathan Aquila told Chief Mining Warden Andrew Gunua and MMJV community affairs manager David Masani said that the entire community agreed to this pipeline proposal.
Aquila also asked whether it would be possible for MMJV to build a pump station on customary land instead of the Markham Farm, which was a State lease. Masani told Aquila that the decision to build a pump station was based on the mining engineering plan but the nature and magnitude of the operation at Wafi-Golpu would determine if there would be need be expand onto customary land in future.
Gunua and Kevin Gamenu from the Mineral Resources Authority (MRA) are conducting the warden hearings with landowners at Yanta and Hengabu from Mumeng, Bulolo, Babuaf and others anticipated to be impacted by the mine pipeline and access road.
Masani told the villagers that the 32 km road would start from the interior project site and cross the major Watut and Markham rivers as well as the three small creeks.
Meanwhile, Saab-Babuaf clans from Mare and Chiatz villages interjected and raised concern over the course of the pipeline from Wafi across Watut.
They said the pipeline would encroach on their land so they would like to know the full extent of the environmental impacts.

* Harmony Gold and Newcrest Mining are the owners of Morobe Mining Joint Venture

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Hidden Valley landholders furious at MRA delays

Newcrest has sold its stake in the Hidden Valley mine to Harmony

Sampson Bonai | Post Courier | November 18,2016

THE revised Memorandum of Agreement (MOA) of the Hidden Valley gold mine in Wau is gathering dust at the Mineral Resource Authority head office in Port Moresby pending its endorsement two years ago.

A furious Nakuwi Landowners Association president Rex Mauri questioned the motive behind MRA’s delay in its endorsement of the revised agreement during a media conference in Lae yesterday:

“Why has MRA delayed the endorsement of the revised and initial agreement of Hidden Valley gold mine for its implementation two years ago?

“The revised agreement had been negotiated by all stakeholders including Morobe Mining Joint Ventures, Mineral Resources Authority, Treasury, Morobe Provincial Government and the Hidden Valley landowners in 2013-2014”.

It had been initialed and is awaiting endorsement from the government for its implementation, since four years ago.

“I’m very disappointed over the long delay and call on the relevant state agencies to fast track the approval process and endorse the revised agreement for the benefit of all stakeholders,” he said.

The outspoken president said the delay had greatly affected the three landowner villages of Nauti, Kwembu and Winima from participating in all the major spin off business activities from the mine.

He said the original Memorandum of Agreement was signed in August 5, 2005 by the developer and all the stakeholders in Wau before the commencement of the construction work on the mine in 2006. The mine began mining operations and poured its first gold bar in the first quarter of 2009. The mine was commissioned by Prime Minister Peter O’Neill on September 30, 2010. The review of the original MoA had been done after four years of operations between 2013-2014 and a revised agreement had been initialed.

He explained that the landowners have become spectators on their own land and outsiders have capitalised on the delay by taking out most of the major contracts from the mine. He called on Prime Minister Peter O’Neill to intervene and direct MRA to forward the revised agreement to the Government to have it signed and endorsed.

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St Barbara’s PNG gold fails to lure precious bid

St Barbara CEO Bob Vassie

St Barbara CEO Bob Vassie

Barry Fitzgerald | The Australian | November 15, 2016

St Barbara has pulled the sale of its Papua New Guinea gold assets — including the 100,000 ounce a year Simberi mine — after bids failed to match the company’s expectations.

“While a number of potential buyers expressed interest in the PNG assets, their level of interest did not meet St Barbara’s assessment of the value of these assets,’’ the company said.

Simberi has a mine life of about two years ahead of it, with a possible seven-year life extension if a $135 million development of the operation’s sulphide mineralisation was to proceed.

St Barbara stopped short of making any decision on the sulphide project but has come up with a possible life-extending oxide solution in a joint venture with Newcrest.

Under the deal between the pair Newcrest will explore for copper-gold on St Barbara’s tenements on the nearby Tatau and Big Tabar islands.

Newcrest could earn up to a 75 per cent interest by spending $US25 million ($33m), with St Barbara retaining the rights to oxide and sulphide material capable of being treated back on Simberi, either through the existing oxide plant, or the contemplated sulphide plant.

St Barbara itself will continue to push ahead with its own exploration across the Tabar island group for life-extending ore for Simberi, if not make a stand-alone discovery.

Managing director Bob Vassie said Simberi was now consistently generating good cash flows.

“We’ve tested each strategic option for the future of the PNG assets, and we are now clear about the preferred strategic direction,’’ Mr Vassie said.

Credit Suisse mining analyst Michael Slifirski said the decision to keep Simberi in part reflected St Barbara’s reduced need for cash for debt reduction given the strong cash flows from its Australian operations.

He said the high cost and scarcity of acquiring a replacement asset and the materially improved operating performance of Simberi were also likely to have been factors.

“But reserves (at Simberi) are depleting fast.’’

St Barbara shares were caught in yesterday’s sell-off in gold equities in response to continued gold price weakness, falling 25c or 9.8 per cent to $2.28. Gold has fallen from more than $US1300 an ounce before the US election to $US1223 an ounce late yesterday.

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St Barbara retains PNG assets, forms exploration JV with Newcrest

simberi

Simberi island

Esmarie Swanepoel | Mining Weekly | 14 November 2016

Gold miner St Barbara Gold has decided to retain its Simberi operations, in Papua New Guinea, following a strategic review.

The company in February this year launched the review to evaluate “various options” for the assets, including continued ownership, exploration and development, possible joint ventures and divestment of some or all of its assets in the country.

St Barbara said on Monday that while a number of potential buyers had expressed interest in the Papua New Guinea assets, their level of interest did not meet the company’s assessment of the value of the assets.

Instead, the company has inked an option and farm-in agreement with gold miner Newcrest’s Papua New Guinea exploration arm, for copper/gold porphyry exploration on the tenements on nearby Tatau and Big Tabar Island, subject to the completion of conditions precedent.

The agreement gives Newcrest the option to earn a 75% joint venture interest on tenement holdings, and will require Newcrest to pay an initial $3-million in exploration fees over a two-year option period, conducting 4 000 m of diamond drilling.

The company can then earn a majority share in the projectareas by spending a further $25-million in exploration and drilling 32 000 m of diamond drilling, over two stages ranging up to six years.

Under the agreement, St Barbara will manage the explorationduring the initial earn-in period, and will retain the right over all oxide and sulphide material which is, or has the potential to be mill feed for existing oxide or the contemplated sulphide plant at Simberi.

In addition, St Barbara will spend between A$6-million and A$7-million in 2017 on its own exploration across the Tabar Island group, including Simberi.

MD and CEO Bob Vassie told shareholders on Monday that the strategic review had been rigorous, and that the company had tested each strategic option for the future of the Papua New Guinea assets.

“What we own in the Papua New Guinea would be difficult to replace in the current market. St Barbara’s diligent work over the last few years has successfully turned around the Simberi operation, which is now consistently generating good cash flows.

“The prospectivity of the region, and the potential for exploration discovery on the Tabar Island group is demonstrated by the significant option and farm-in agreements with Newcrest.”

Vassie said that the gold miner’s focus was on continuing exploration work to extend the oxide mine life at Simberi, improve the sulphide opportunity, maximise the value from exploration interest, and work with Newcrest to achieve success from the joint exploration

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