Tag Archives: Newcrest Mining

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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Lihir Mine yet to confirm cause of tidal surges

lihirisland

The National aka The Loggers Times | June 2nd, 2016

OPERATOR of the Lihir gold mine in New Ireland, Lihir Gold Limited, says it is yet to confirm the cause of a tidal surge on May 12.
Villagers at Londolovit where the mine gets its water from had blamed continuous waste rock dumping at sea floor and dynamite blasting at the mine.
Londolovit Sagomana Association Inc chairlady Roselyn Arau said Chief Secretary Isaac Lupari had been informed about “on-going man-made disasters” occurring along the coastline of Lihir island. 
She said Londolovit village had become a victim of these “man-made” disasters. On May 12, a sudden tidal surge struck at 11am causing millions of kina worth of damage to properties. 
No lives were lost.  
Arau said people fled for their lives leaving Londolovit (Lihir) town deserted.
She said it was the sixth time tidal waves had struck their village.
Arau said in a letter to Lupari dated May 23 the association demanded:

  • Payment for the May 12 damage;
  • Intervention by the national disaster and emergency office by instigating a scientific study into the cause of these waves; and 
  • LGL to claim liability. 

General manager Craig Jetson said the company was working with the Nimamar local level government and stakeholders to investigate what caused it. 
“For example, there have been reports of the tidal surge being experienced in the Namatanai area which if confirmed indicates that it may not have been a localised event 
“As there are a wide range of potential factors involved, the investigation should be thorough.” 

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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

lihir_mine

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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