Tag Archives: Newcrest Mining

Chan pushes Lihir peace talks

A gorgor, made from the twisted leaves of a ginger plant

A gorgor, made from the twisted leaves of a ginger plant, at the Lihir mine site

Francis Uliau | The National aka The Loggers Times | May 9, 2016
THE State, through the Mineral Resources Authority (MRA), continued the peace process between major stakeholders in the Lihir gold project in Namatanai, New Ireland, on Friday.
“Mining Minister Byron Chan and New Ireland Governor Sir Julius Chan both attended with a big delegation including MRA officials from head office in Port Moresby,” Lihir Mining Area Landowners Association (LMALA) chairman James Laketan told The National on Friday.
MRA Lihir project coordinator Vincent Kisso could not be contacted to provide background reports on the event.
Questions over MRA’s (and the State’s) stance on issues and laws governing gorgor placements also remained outstanding.
Friday’s ceremony was a follow-up to the spiritual and traditional reconciliations held in Kavieng and on Lihir Island in February and March.
Minister Chan, who attended the March 5 traditional reconciliation ceremony between the Nimamar LLG and LMALA spoke highly of the peace process and assured all parties, including local landowners and developer Newcrest Mining Limited that the National Government fully endorsed the current way forward.
He assured the project proponents that Prime Minister Peter O’Neill and all Cabinet ministers had recognised and endorsed the reconciliation ceremonies.
Governor Sir Julius did not attend the March 5 traditional ceremony because he was then overseas for a minor surgery. However, he was on the island on Friday.
Laketan said part three of the reconciliation process on Friday would allow for outstanding benefits and commitments in the Lihir memorandum of agreement (MOA) and integrated benefits package (IBP) to be honoured.
“Mining activities on Lihir are ongoing and all project proponents must also step up on our activities.
“The Lihir Agreements Review (LAR) process is long overdue. Now is the time to sit down with the State, through MRA, and developer Newcrest and fast-track all prerequisites to the IBP,” Laketan said.
“The Lihirian people have suffered enough.
“Years of infighting have created instability and suffering for our people.”
A review of the IBP had been outstanding since 2007.
LMALA general manager Joachim Malele said the ongoing conflict had affected the implementation of projects and programmes under the Lihir Sustainable Development Plan (LSDP).
Malele, who was general manager LSDP until his elevation to head LMALA in late March, said there was a major need to progress all chapters of LSDP through the State, landowner association and the local, district and provincial governments.
Meanwhile, describing LAR, MOA and IBP processes as “taking too long”, Minister Chan said MRA and Newcrest Mining must release all outstanding commitments, including grants and benefits, to the Lihir people and their local, district and provincial governments.
“Put aside your differences and progress discussions to obtain and deliver what rightfully belongs to the people,” the minister said.

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Lihir plans to optimise mine operations


The National | May 2nd, 2016

 LIHIR gold mine in New Ireland has a potential mine life of more than 30 years based on current gold reserves, mine general manager Craig Jetson says.
He told a recent stakeholders meeting that an optimisation plan known as the “Lihir Pit Optimisation Plan” would set the pace of the mine’s operations into the future.   
An explanatory note from Lihir owner Newcrest to The National said the optimisation plan was being undertaken to optimise the integrated life of mine plan for Lihir, including seepage barrier options.  
“It is effectively looking at different mine sequencing and ore scheduling options, the most appropriate mining methods and civil engineering options to help Newcrest decide the best way to expand Lihir’s open pit and access additional ore sources,” the company said. 
“One of the key challenges is how to stop the water in Luis Harbour from entering the open pit as the expanded pit gets closer to the harbour edge, hence the references to a seepage barrier.”  
The project had been completed to prefeasibility study stage and in February this year, Newcrest approved the project to progress to feasibility study stage. Highlights from prefeasibility study included:

  • Forecast reduction in estimated capital expenditure requirement for the seepage barrier to US$215 million (K673 million), compared to the US$1.29 billion (K4.04 billion) in 2013 prefeasibility study which included a cofferdam;
  • lateral mine sequence development affirmed; and,
  • near shore cut-off wall and harbour infill replacing previously proposed cofferdam.

As part of the feasibility study, Newcrest would work with all relevant government agencies and communities to identify any approvals and consents necessary to implement the proposed mine plan.
Craig revealed expansion plans to build an inner harbour wall that is expected to start late this year at an estimated cost of K1 – K1.5 billion. 
He said completion of the project would set up mining for next 30 years.
“That’s a bright future for the Lihirian people and Papua New Guinea,” he said.  
“It is great to work with an asset of much inherent value such as Lihir.”

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Newcrest trying to dump Hidden Valley

Hidden Valley

Banks are believed to have been tapped for the possible sale of Newcrest’s Hidden Valley PNG mine

The Australian | April 17, 2016

Investment banks Citi or Credit Suisse are believed have been engaged by the listed gold miner Newcrest to sell its stake in the Hidden Valley asset in Papua New Guinea.

The official line is that the company has engaged advisers to explore various options for the mine, which could include further spending on the operation to extract more value or a divestment.

However, the appointment by an investment bank typically creates the impression around the market that the asset is for sale.

It is thought to be worth tens of millions of dollars rather than hundreds of millions, sources told DataRoom.

China’s Xijin and South Africa’s Gold Fields were been named as two of the most likely candidates to bid for Newcrest’s share of the mine earlier this year.

The mine, one of three that it owns in PNG, has struggled to turn a profit since it started producing gold for sale in 2010, and some question whether the asset, which produces more silver than gold, is shut down rather than sold due to its troubled history.

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Ceremony marks end to Lihir mine conflict


Post Courier | March 14 2016

A RECONCILIATION ceremony marked the end of a six-year conflict over the ownership and benefits from the Lihir Gold Mine in New Ireland Province.

The ceremony marked an understanding that was signed in Kavieng by Governor Sir Julius Chan, Nimamar Local Level Government president Ambrose Silul and LMALA chairman James Laketan in March 2015 to work together for the best interest of the people of Lihir and New Ireland.

The reconciliation process concluded that there would be two parts to the peace process: the first being the spiritual reconciliation held on February 26-27.

The second part was performed on Lihir Island at Potzlaka, a Government station on March 5. A provincial Government delegation led by chairman sports and youth representative Engelberth Lutham attended the reconciliation ceremony at Potzlaka. Mr Lutham congratulated the leaders of Lihir, especially the LMALA chairman James Laketan and Nimamar president Ambrose Silul for their initiative, dedication and commitment through hard work towards the preparation of the successful event.

“Working together, there is nothing we cannot do,” Mr Lutham.

The reconciliation process paves the way forward for the six-year conflict over the ownership and benefits of Lihir sustainable development plan as stipulated in their integrated benefits package 2 signed in 2007. The six clans and 15 wards, with all the leaders of Lihir Island stood together to express great satisfaction as a result of the successful ceremony after suffering from past years’ difference over the benefits from Lihir gold mine.

Governor Sir Julis Chan, who was overseas and could not attend, said this was a significant event not experienced elsewhere in the country.

“Once again, New Ireland has shown the way to a peaceful and lasting settlement of disputes,” he said.

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Harmony and Newcrest plan 65km pipeline

Business Day Live |17.02.2016

HARMONY Gold and its partner, Australia’s Newcrest Mining, plan to build a pipeline traversing about 65km of Papua New Guinea to pump a copper and gold concentrate from their Wafi mine to the port of Lae.

The Wafi pipeline will be far shorter than the 529km pipeline Anglo American built to pump iron-ore slurry to the coast. Another critical difference is that Harmony does not foresee that permit challenges will stall its project — something that gave Anglo executives sleepless nights and led to project cost and time overruns.

Johannes van Heerden, the CEO of Harmony’s East Asia unit, said the pipeline would be installed along areas that already had infrastructure in the form of power lines or a highway.

While he was sanguine on the pipeline, experience of operating in Papua New Guinea, where Harmony and Newcrest built and operate the loss-making Hidden Valley gold and silver mine, has meant the partners have given themselves a two-year window to secure approvals from a broad range of stakeholders for the Wafi mine.

The mistakes the partners made at Hidden Valley, which is under consideration for sale, closure or reinvestment, have proved an expensive but valuable lesson in building and operating a big mine in Papua New Guinea.

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New Gulpu mine will blow a hole in Vision 2050 and the Constitution

According to the government’s Vision 2050, strong economic growth has not translated into better living standards for the majority of the population and therefore Papua New Guinea needs to move away from an economy based on resource extraction and mineral exports to a more stable and resilient future based on local industries.

Vision 2050 says we need to shift an economy currently dominated by the mining and energy sectors, to one that is dominated by agriculture, forestry, fisheries, eco-tourism and manufacturing. This means reducing the level of mineral and energy export from their current 80% level to just 30% by 2050. Only in this way can we improve our human development and living standards.

But instead of following its own Vision, and honouring our National Goals, which demand self-reliance and national sovereignty and a respect for PNG ways, our government is committing itself to continuing along the same failed path that we have seen over the last twenty or thirty years – more mining, more logging and more misery for ordinary people while foreign corporation and a small elite make massive profits…

Zero external funding a possibility for new $2.6bn Harmony mine 

Martin Creamer | MIning Weekly | 15.02.2016

Gold mining company Harmony said on Monday that its current expectation was that it would not require any external funding to build the Golpu copper/gold mine with its 50% joint venture partner Newcrest and buy-in from the government of Papua New Guinea (PNG).

The JSE-listed company estimated the first-stage project capital on a 100% basis at $2.6-billion, with an internal rate of return (IRR) of 16%.

Announcing the results of the initial feasibility study and the second-stage prefeasibility study to analysts and journalists, new Harmony CEO Peter Steenkamp said that both studies confirmed a robust investment case that supported proceeding with the project.

The first-stage feasibility study justifies the development of twin exploration access declines, with two proposed block caves designed to extract half of the contained copper and gold of the Golpu reserve.

Planned was for the 50% remaining reserve to be extracted by a deeper block cave below the second-stage block cave, Harmony South East Asia CEO Johannes van Heerden reported.

The outcome of the options once pursued points to the total resource having a net present value of $2-billion with a 17.5% IRR.

“The other benefit that comes through out of this is you’re actually able to fund this ongoing development as part of your mine development. So you are able to progress this without going cash flow negative,”

Van Heerden told the meeting attended by Creamer Media’s Mining Weekly Online.

Harmony’s half share of the ore reserve is 5.5-million ounces of gold and 2.4-million tonnes of copper.

The mine has a 28-year life-of-mine with low operating costs.

The targeting of the highest-grade sweet spot for first-stage production allows for very strong initial cash flows.

Once out of the porphyry, the grade profile decreases as does the cash-flow profile.

The project is currently considerably more valuable than it was two years ago and on the basis of Harmony’s latest quarterly financial results, would produce double the free cash flow of Harmony’s best performing South African gold mine, at some $32-million, from output of 70 860/oz.

However, given Harmony’s poor returns from its joint venture Hidden Valley gold mine, with Newcrest, in PNG, mining analysts peppered Harmony management with penetrating questions.

Citibank analyst Johann Steyn recalled that in 2002, Harmony also guided 300 000 oz/y from Hidden Valley by 2008, but that Hidden Valley had not ever managed to produce above 100 000 oz/y since development.

“The key trouble with something like Golpu is that it looks exceptionally exciting but execution risk on something so complex can really be the swing factor between this becoming very profitable and being massively value destroying,” Steyn said, adding that Harmony’s share of capital of $2.6-billion for Golpu was bigger than its current market capitalisation.

Harmony CFO Frank Abbott pointed out that the capital outlay would be spread over a long period and it was not as if Harmony would be required to come up with $875-million in year one.

“We believe the amounts required are very affordable and repayable and our current cash flow is substantially more,” Abbott said, adding that if the PNG government decided to exercise its right to buy a shareholding, the capital would be an even easier ask.

The plan is for the processing infrastructure of the first phase to be used to support the development of the second stage.

Engagement  with  key  stakeholders, including the PNG national government, the Morobe provincial government, landowners and community representatives was continuing to “ensure clear alignment on the project objectives”.

The Harmony share price fell 8.3% before 11 am on Monday to R40.35 a share.

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Foreign owned mining companies not good corporate citizens in PNG

Foreign owned mining companies operating in PNG are abusing our hospitality and trust by failing to pay any corporate tax.

Companies like Barrick Gold, Newcrest Mining and Harmony Gold make millions of dollars from their “World Class” gold, copper and silver mining in PNG.

But they manipulate their income and expenditure to avoid declaring profits and thereby avoid corporate income tax, according to figures released by the PNG government [pdf file].

The table below shows the corporate taxes paid by the mining industry in PNG in 2013.

corporate income tax

Foreign owned Barrick Gold (zero), Lihir Gold (K4.5million), Hidden Valley (zero), MCC Ramu nickel (zero), Simberi Gold (zero), and Harmony Gold (zero) paid a total of K4.5 million in Corporate Income tax.

In contrast, PNG owned Ok Tedi Mining paid a whopping K105 million – so clearly 2013 was not a bad year for mining in PNG.

To compound the injustice, Lihir, Porgera and Hidden Valley actually produce 3 times as much gold (1.5 million ounces) as Ok Tedi (500,000 oz) – so these foreign owned entities should be paying the most in tax, but they manipulate the rules to avoid their liabilities.


In stark contrast to their miserly corporate tax contribution, the total value of the gold, copper and silver exported from Porgera, Lihir and Hidden Valley in 2013 was over K4,500 million.

export value


But these foreign mining companies paid NO corporate tax.


Filed under Financial returns, Papua New Guinea