Tag Archives: Newcrest Mining

Harmony and Newcrest submit application for Wafi-Golpu mining lease

Hidden Valley

Harmony and Newcrest already operate the Hidden Valley mine which is expected to close soon

Allan Seccombe  | Business Day Live | 25 August 2016

HARMONY Gold and its Australian partner Newcrest Mining have submitted an application for a special mining lease for its copper and gold Wafi-Golpu project in Papua New Guinea.

Harmony and Newcrest are equal partners in the Golpu deposit, which has a resource of 824-million tonnes containing 1.05% copper, 0.7 grams per tonne of gold and 1.25 grams a tonne of silver. It also contains 90 parts per million of molybdenum, which is used in various steel applications and as an alloy.

Harmony CEO Peter Steenkamp said recently the partners had pencilled in a two-year wait to secure the lease.

The partners are conducting further work to optimise the costs of bringing Golpu into production, giving Papua New Guinea its largest underground mine, Harmony said on Thursday.

“Further project development will be subject to the granting of the special mining lease, the obtaining of all necessary permits, approvals and agreements, and, ultimately, approval by the boards of both Harmony and Newcrest,” it said.

The Papua New Guinea government has the right to buy a 30% stake in the Golpu project at any time up to the start of mining, which would reduce the partners’ stakes to 35% each, Newcrest said on Thursday.

Harmony wants to grow its gold production to 1.5-million ounces in the next three years, from 1-million ounces this year, to give it the mass to take on the funding of the Golpu project, Steenkamp said.

Harmony has put three South African mines into harvest mode, stopping mining at the operations over the next three to five years and taking more than 200,000oz out of its production profile, leaving it too small to tackle the project, he said.

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Government about to amend draft Mining Law to suit foreign miners

The government has delayed presenting the revised Mining Act to Parliament under heavy pressure from the foreign owned mining industry.

The revised Act is now being further amended to suit the likes of Barrick Gold, MCC, Harmony Gold, Newcrest Mining and, of course, Guandong Rising Assets Management (GRAM).

It is not hard to join the dots from the two stories below in today’s Post Courier newspaper…

o'neill in parliament

Cabinet to gazette revised Mining Act
Gorethy Kenneth | Post Courier | August 10,2016
CABINET yesterday addressed the issue of getting the revised Mining Act 1992 approved which was reported in the newspapers yesterday.
Prime Minister Peter O’Neill announced in Parliament yesterday that there are plans to appoint a senior ministerial committee that would discuss with the stakeholders on some of the concerns that are being raised on this issue.
But Mr O’Neill assured that the particular submission to review the Mining Act 1992 is now before Cabinet.
“Cabinet has already started deliberating on this matter and of course again we have received the representations from the PNG Chamber of Mines and Petroleum raising some concerns about the mining proposal put forward by our people,” he said.
He was responding to questions raised by Chuave MP Wera Mori citing newspaper reports stating that Mining Secretary Shadrach Himata blamed the Chamber of Mines and Petroleum for being the stumbling block to getting the revised legislation approved.
But O’Neill defended that. “I want to assure the good Member that we will communicate with the industry, in fact the matter was discussed in Cabinet this morning but we have also deferred the discussions to next week because I want to put a senior Ministerial Committee that would discuss with the stakeholders on some of the concerns that are being raised. We have to iron out these concerns before we bring in the legislation.”
“This review has been going on since 2006, that was the first review that was conducted and it was stopped in 2009,” O’Neill said.
“I want to assure you that we are looking at this in a diligent manner, we want to be fair to everybody including investors Mr Speaker, without the investors large scale mines like Frieda and Wafi cannot be developed.”

Chamber wants mining law conducive to investment
Post Courier | August 10, 2016
The PNG Chamber of Mines and Petroleum says it wants a modern, internationally competitive mining legislation to underpin a world class industry and attract continued investments into the country.
The Chamber was responding to comments by secretary of the Department of Mineral Policy and Geo-hazard Management (DMPGM) Shadrack Himata who had accused it of being a blockage in getting the revised law approved.
In a statement released yesterday the Chamber said it and industry members had been involved in a lengthy discussion process with DMPGM in which they had made contributions drawing from the experience of its members operating in various countries.
Further, where required seeking independent and comparative analysis of the proposed changes to test its potential impact on the industry and the flow on impact to the overall economy.
“It is on the basis of those comparisons that the Chamber highlight edits significant concerns with the changes being proposed for the Mining Act.”
The Chamber said that the proposed changes to the Mining Act would cost Papua New Guinea billions in State revenue, millions of kina in landowner and stakeholder benefits, thousands of jobs and will also have drastic impacts on social development such as health, education and training, impact the growth of Small to Medium Enterprises (SMEs) and landowner businesses by driving away much needed direct foreign investment.
It said planned future projects like the Frieda River, and the Wafi-Golpu projects will also be impacted by the proposed Mining Act, rendering them economically unviable.
The Chamber said despite repeatedly raising these issues and making detailed explanations of their impacts, the DMPGM was not able or not willing to fully consider the impacts.
It also believes the proposed Mining Act will severely impact the attractiveness of PNG as a mineral exploration and development destination with these impacts to be felt throughout the PNG economy in the short, medium and long term.
“As the PNG economy is experiencing, as we go through weak economic conditions, the importance of maintaining large scale economic projects and the investments they bring becomes paramount.

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Filed under Financial returns, Papua New Guinea

Hidden Valley mine unlikely to survive

Hidden Valley

The future looks bleak for the loss making Hidden Valley mine, which could be closed down within 12 months according to The Australian newspaper [see story below].

Hidden Valley is jointly owned by Newcrest and Harmony Gold.

The latest financial figures from Newcrest show production costs of $1,564 an ounce are outstripping the price of gold.

According to The Australian, Newcrest are “reviewing all strategic options in relation to the future “ and “without further investment in pre-stripping operations, the mine will halt in about 12 months”.

Related stories:

Dividends back at Newcrest despite weak quarter
Barry Fitzgerald | The Australian | July 26, 2016
Leading gold producer Newcrest is set to resume dividend payments after a three-year hiatus despite finishing off the 2016 financial year with a weak June quarter production report.
Underpinning the resumption of dividends expectation was Newcrest’s $US800 million or 27 per cent reduction in net debt in the June year to $US2.1bn, helped as it was by strong margins of more than $US400 an ounce.
The debt level is down from peak debt of $US4bn in 2013, the last time dividends were paid.
Analysts expect Newcrest to announce at least a US5c a share dividend when it releases its results next month. That is expected to be US10c a share for 2017 and as much as US40c a share in 2018.
The group’s June quarter production report, released yesterday, was disappointing across all operations, according to Credit Suisse mining analyst Michael Slifirski.
Gold production for the period of 598,037 ounces was below the 636,521 ounces in the preceding March quarter, and all-in sustaining costs rose by 9 per cent $US787 an ounce.
Production for the full year was marginally higher at 2.4 million ounces, just over the line to meet the group’s guidance for production of between 2.4 million to 2.6 million ounces.
Chief executive Sandeep Biswas said Newcrest had delivered a solid performance considering challenges at some sites.
“The 27 per cent reduction in net debt reflects our focus on cash generation,’’ he said.
Gosowong’s overall output was down from 38,865 ounces in the preceding March quarter to 17,644 ounces.
At the half-owned Hidden Valley mine in PNG, lower grade and lower treatment rates brought a production cost blow-out to $US1562 an ounce, up from $US542 an ounce in the preceding March quarter.
The partners are reviewing are “reviewing all strategic options in relation to the future’’ of Hidden Valley. Without further investment in pre-stripping operations, the mine will halt in about 12 months.
At the mainstay Cadia mine in NSW, production was down from 203,512 ounces in the preceding March quarter to 178,754 ounces. Premature failure of liners in a concentrator resulted in higher than normal downtime.
All-in costs continued to impress at $US394 an ounce.

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Lihir numbers not so impressive in the breakdown

gold

All Lihir’s gold has only delivered the equivalent of K2.67 per week for each New Irelander

Newcrest Mining has been proudly boosting [see below] about the royalty payments it has made from its Lihir mine in New Ireland. At first glance the numbers seems impressive, over K500 million paid out to the Provincial and local governments and landowners. Some may rightly ask where all that money has gone, as services and infrastructure in New Ireland are no better than in any other Province in PNG. But dig a bit deeper and Newcrest’s numbers don’t seem quite so impressive.

The royalty payments are a cumulative total after nineteen years of mining, break that K529 million down over 19 years and the annual figure is less than K28 million.

If that K28 million was shared equally among all the 200,000 people living in New Ireland, each would receive just K140.

So, the returns to New Ireland from 19 years of mining, K529 million, represents the equivalent of just K2.67 per person per week!

K2.67 per week from the production of over 9 million ounces of gold worth, at todays price, US$ 12,600 million (or K 40,000 million).

YES the gold taken from Lihir is today worth K40,000,000,000!

Lihir mine pays out royalty payment
Source: The National,aka The Loggers Times, Friday July 1st, 2016
THE Lihir Gold Limited had made royalty payments of K529,251,440 million to recognised parties in the past 19 years [an average of about K28 million each year].
It released a royalty payments update from 1997 to 2016 showing how much each party had received since 1997.
New Ireland provincial government received K264,625,720 million [K14 million per year] and the Nimamar local level government received K158,775,431 million [K8 million per year].
The special mining lease block owners  received K105,850,289 million [K5.5 million a year].
Lihir Gold Limited general manager Craig Jetson said royalty distribution from the Lihir gold mine was different from other mining operations in PNG.
This is because of an agreement by the State. A series of memorandums between the Government and the NI provincial government, LLG and Lihir Mining Area Landowners Association (LMALA), diverted all of the State’s entitlement to royalties to New Ireland.
He said the distribution were 50 per cent to the provincial government, 30 per cent to the LLG and 20 per cent to SML block owners.“For NIPG and NLLG, 100 per cent of their respective royalty portions is paid directly into their nominated bank accounts every month. “For the block owners, 5 per cent tax is deducted and paid to the Government and 20 per cent is paid as a savings component.”,” he said.

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Company Boards still to approve Wafi-Golpu commitment

Hidden Valley

With their Hidden Valley mine unable to return a profit do Harmony and Newcrest really have the stomach for another JV?

Joint venture prepares for mining [really?]

Gedion Timothy | The National aka The Loggers Times | June 27, 2016

THE Wafi-Golpu Joint Ventures, since the announcement of the findings of its feasibility study, is focusing on preparing an environment impact statement and a special mining lease application.
General manager Sustainability and External Relations David Wissink said the impact statement and the mining lease application would be submitted to the Government after the approval of the Newcrest and Harmony boards before the start of the next phase of development.
“The proposed mine development is underground, targeting the rich Golpu copper-gold porphyry ore body. Feasibility study investigated the establishment of two block caves – block cave one BC1 and a deeper block cave two BC2  –  along with associated infrastructure, processing plant, roads, electricity, water management and port facilities,” Wissink said

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PNG a global hot spot for toxic tailings dumping

Tailings_Infographic

Earthworks

In some parts of the world, mining companies directly dump this mine waste into rivers, lakes and oceans. In fact, mining companies are dumping more than 180 million tonnes of hazardous mine waste each year into the world’s waterways, threatening vital bodies of water with toxic heavy metals and other chemicals poisonous to humans and wildlife.

This Tailings Infographic [pdf file] shows the extent of the problem.

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Foreign mining industry looks to future gains in PNG

PNG’s mining industry received a much-needed boost in March, when the giant Ok Tedi copper and gold mine resumed production

PNG’s mining industry received a much-needed boost in March, when the giant Ok Tedi copper and gold mine resumed production

Oxford Business Group | 15 Jun 2016

The mining sector in Papua New Guinea is showing signs of an uptick after operations resumed at one of the country’s largest mines, with new and ongoing projects set to inject much-needed foreign exchange and employment into the economy.

Indeed, revised forecasts for the development budget of the Frieda River project – which could hold the largest undeveloped copper and gold deposits in the world – bode well for the long-term outlook of the sector.

Revised estimates

Last month PanAust, a subsidiary of Chinese state-owned Guangdong Rising Assets Management (GRAM), released the results of its feasibility study for its Frieda River project in north-west PNG.

The open-pit mine is estimated to have an average annual production in concentrate of 175,000 tonnes of copper and 250,000 ounces of gold, and is projected to have an initial operational life of 17 years, according to the study.

The company doubled the forecast budget for the developmental stage of the mine to $3.6bn, and an additional $2.3bn is set to be invested during the life of the project.

In part, the increase in the development budget is a result of higher construction and waste management costs, but also reflects increased expectations for the project, which require more extensive infrastructure.

With the application process for the mine likely to take about two years, followed by an estimated six-year construction period, the earliest that the Frieda River mine is expected to start shipping product is late 2024, local media reported.

As of mid-2016, no formal financing had been secured and a construction date had yet to be announced, according to GRAM.

GRAM bought the leading stake in the project last year, continuing a trend of Chinese firms seeking access to overseas copper sources. China is currently the largest single market for copper, which is currently priced at seven-year lows.

Project pipeline

Coming on-line well ahead of the Frieda River project, however, is the Wafi-Golpu project, a bright spot in PNG’s mining market. First production at Wafi-Golpu – a joint development between Australia-based Newcrest Mining and South African miner Harmony Gold – is slated for 2020.

The companies expect production will reach 320,000 ounces of gold and 150,000 tonnes of copper in the first stage, with an estimated lifespan of 27 years.                                

The first stage of the project will cost an estimated $2.3bn, with life-of-mine expenditure forecast at $3.1bn.

Back in action

PNG’s mining industry received a much-needed boost in March, when the giant Ok Tedi copper and gold mine resumed production after operations were suspended in August of last year due to drought conditions brought on by El Niño.

The lack of rain had resulted in lower water levels of the Fly River, hindering vessels from carrying the take from Ok Tedi downriver.

In the months before the drought broke, disruption to production resulted in losses of P2bn ($43m), according to local media.

Potential regulatory headwinds

Plans to draft new legislation and amend the act governing the industry’s regulatory agency, the Mineral Resources Authority (MRA), could have significant implications for the industry, according to Ken MacDonald, chairman of mining company Highlands Pacific, which has a 20% stake in the Frieda River project.

The revised MRA act foresees a doubling of the production levy payable by miners, which currently stands at 0.25% of assessable income. It also would give the authority control over the proceeds of that levy and remove the industry from representation on the MRA board.

“Perhaps more importantly, a review of the Mining Act is being contemplated, and while the situation remains fluid, it is important that care be taken to ensure that the new act does not […] end up with legislation that discourages further investment in PNG,” MacDonald said at a company meeting last month.

The PNG Chamber of Mines and Petroleum has warned that the downturn in the global commodities market has already seen a number of foreign investors walk away from projects in PNG, and some stakeholders fear that a more stringent operating environment could exacerbate this trend. 

However, supporters of the reforms say the changes will make mining firms more accountable, ensure an equitable distribution of earnings and provide long-term sustainability to communities beyond the operating life of a mine.

In the shorter term, development of the Frieda River and Wafi-Golpu projects should see billions of dollars worth of investment injected into the PNG economy over the next eight years, providing a much-needed boost for auxiliary industries, such as construction and services, as well as generating jobs, secondary investment and cash flow – all of which have been in short supply in PNG of late.

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