Barrick (Niugini) Limited (BNL) and the Internal Revenue Commission of Papua New Guinea (IRC) are pleased to announce that BNL, Barrick Gold Corporation, and the IRC have settled all disputes and issues relating to old Porgera tax matters on terms satisfactory to the parties.

Although BNL and Barrick had the option of appealing the objection assessment, the parties resolved to settle the matter amicably in the interest of reopening the Porgera mine. The settlement enables BNL and the State to reopen Porgera as soon as other pending matters are finalised.

BNL would like to express its appreciation to the IRC for their cooperation and professionalism throughout the resolution process. The company remains committed to upholding the highest standards of corporate integrity and ethical conduct.

Photo: Porgera gold mine in PNG's Enga Province (Barrick)

The PNG Chamber of Mines and Petroleum (“the Chamber”) congratulates the Internal Revenue Commission (IRC) and Barrick (Niugini) Limited (BNL) on settling all disputes and issues relating to old Porgera tax matters.

This follows the announcement of a Deed of Settlement earlier this week, signed by IRC Commissioner General, Sam Koim, and Barrick Chief Operations Officer Latin America and Asia Pacific, Mark Hill.

The Chamber President Anthony Smaré said this development brings the imminent reopening of Porgera one step closer to fruition.

“Tax contributions are an important aspect of social licence for the operation of a project thus the Chamber is pleased that both IRC and BNL have come to an understanding regarding the old Porgera tax disputes and related issues. Through constant dialogue, these issues have been resolved, thus allowing the parties involved in New Porgera to focus on other regulatory requirements for Porgera.”

“The Chamber looks forward to more favourable progress towards the reopening of this strategic resource project for the benefit of all stakeholders.”

“Porgera remains an important project for the nation, and in particular Enga Province and Highlands region. Efforts towards reopening Porgera are welcomed, as all stakeholders can now also prepare to take advantage of the opportunities that will be on offer once the project is up and running.”

Photo: Operations continue at the OTML Mine.

Ok Tedi Mining Limited (OTML) brings 100% of its sales revenue into the country and provides an average of more than US$600 Million in foreign currency annually into the Papua New Guinea market.

This year, the Company has already provided US$272 Million into the PNG market as at June 20th. In 2022, OTML sold US$580 Million in foreign exchange into the PNG economy and US$674 Million in 2021.

OTML Managing Director and Chief Executive Officer, Kedi Ilimbit said, “OTML generates in excess of US$1 Billion in foreign currency for PNG annually. The Company uses approximately 35% of this to meet its own operational foreign currency requirements and the balance is sold to the commercial banks in PNG.”

He said OTML never holds more than one to two months for its own FX needs.

Mr Ilimbit further added that OTML is compliant with the Central Bank’s regulations and continues to efficiently submit monthly reports of the FX bank account balances, receipts and disbursements to the Central Bank for monitoring purposes.

OTML is a 100% PNG-owned company and will continue to provide support to the country’s economy through our operations and that includes assisting in alleviating the foreign currency shortfalls by due process.

 

Photo: Panguna Mine

The Autonomous Bougainville Government will not allow foreign investors on Bougainville to breach its laws to exploit its people and resources.

Bougainville President Ishmael Toroama made this statement following the Bougainville Executive Council’s decision to refuse the mineral license applications by joint-venture entities involving Wyndale Holdings Pty Ltd and its local partners.

The Bougainville Executive Council (BEC) is the authority on Bougainville that grants mineral exploration license applications upon advise from the Bougainville Mining Advisory Council.

The first application was for a mineral Exploration License over Eivo/Torau areas and the second was an application for an Artisanal Mining License over the Jaba middle tailings to lower tailings areas.

For the Eivo/Torau areas the BEC made the decision to refuse to grant an Exploration License to Paruparu Joint Venture Limited (PJVL); PJVL is a joint venture involving Wyndale and local company Karatapo Resources Limited.

President Toroama also announced that the BEC has also endorsed the decision by Mining Minister Robin Wilson not to grant an Artisanal Mining License to Bakeuroro Joint Venture Limited (BJVL). BJVL is a joint venture between Wyndale and local company Bakeuroro Investment Limited along the Java mid tailings to lower tailings areas.

Wyndale is a private Australian company with links to Australian Mr. Nickolajs Zuks who claims to have been issued mining licenses by the Autonomous Bougainville Government.

President Toroama revealed the government’s decisions were purely based on application of law, wherein the applicants failed to meet the application requirements provided for under the Bougainville Mining Act 2015.

President Toroama warned that the ABG will not be entertaining companies and individuals who use duplicitous means to exploit Bougainville’s mineral resources.

The President further cautioned investors to be wary of being misled and that the ABG will not be held liable for losses incurred as a result of fraudulent misrepresentations.

PNGX, Papua New Guinea’s national stock exchange, welcomes the statement by Hon. Richard Maru OBE, MP, Minister For International Investment and Trade on 14 June 2023.

Newcrest is an important listing on PNGX, representing the company’s commitment to the country from which it extracts significant resources. PNGX would welcome a continued listing of these assets following completion of the merger with Newmont for similar reasons.

It is not the role of the stock exchange to advocate for or against the merger. However, it is the role of the stock exchange to advocate for the national interest of the capital market.

PNGX agrees that in a resource-rich developing nation such as Papua New Guinea, supporting the local capital markets is an important part of a company’s social, political and economic licence to operate in the country.

On 31 March this year, Hon. Richard Maru, Minister for International Trade & Investment, said “We want the capital market to grow exponentially to the point where all foreign listed companies who buy into or operate and profit from PNG to have a secondary listing on the PNG national stock exchange”.

“PNGX welcomes the further reference in Minister Maru’s statement that in future the Government will put in place a process for all such entities to be listed on the exchange to improve the wealth for Papua New Guinean citizens and landholder companies apart from the State. We look forwards to working with the Minister on this exciting opportunity for local investors” said PNGX Chairman, Mr David Lawrence.

 

A copy of the Minister’s statement on June 14th can be found below: 

 

The proposed merger between Newmont Corporation and Newcrest Mining Limited will have potential implications for Papua New Guinea’s capital market as Newmont has no current plans to maintain current listing list on Papua New Guinea Stock Exchange. This merger has significant ramifications for PNG's capital market and the interests of local Papua New Guinean investors.

According to Newcrest's announcement on 15 May 2023, the proposed merger involves Newmont Corporation of Denver Colorado, acquiring all shares in Newcrest through an Australian Scheme of Arrangement. While Newcrest is currently listed on both the Australian Securities Exchange (ASX) and the Papua New Guinea Stock Exchange (PNGX) as an "exempt foreign company," it is evident that Newmont has no current plans to list on PNGX as a part of its operations in PNG.

Historically, as one of the first companies to list on the PNG stock exchange 25 years ago, the listing of Newcrest on PNGX has been of paramount importance, transcending individual investments and clearly demonstrating Newcrest’s commitment to the country. It avails the opportunity for all Papua New Guineans to participate in the success of their country's inherent wealth. It supports domestic savings through capital growth, facilitates income growth through the distribution of dividends, and contributes to the development of the capital markets through various fees and levies. Losing these benefits to offshore interests will be fundamentally detrimental to the emerging domestic savings and investment market in PNG.

Newcrest has more than 99% shareholders domicile in Australia, and they will follow Australian Takeovers Codes and their legal approval for the scheme. As matter of national interest as Newcrest has significant projects in PNG. I want our local people and institutional shareholders to invest in company that extracts resources from PNG shores.

Newmont has a corporate responsibility to maintain listing on the exchange and further offload portion of the shares to Papua New Guinean institutional companies to increase market confidence and image within the region like Santos did earlier.

The situation raises immediate concerns for the more than 2,700 shareholders domiciled in PNG who hold investments in Newcrest. In simple terms, it denies the Papua New Guinean investment community the opportunity to invest in the country's largest mining operations and will force an outflow of investment funds as investors are forced to re-domicile their holdings to Australia or the USA.

• The delisting of Newcrest from PNGX will significantly impact the overall capitalization of the market, decreasing it by 39%
• Reduction in market liquidity and dilute of PNG shareholders
• Delisting will affect our markets image

However, if Newmont maintain listing on our market, our market capitalization would increase by 84%, demonstrating confidence in the country's economic potential and encouraging further listings and investment. In a resource-rich developing nation such as PNG, supporting the local capital markets is an important part of a company’s social, political, and economic licence to operate in the country.

In the future the PNG government will put in place a process compulsory for all entities to be listed in our exchange to improve wealth for our citizens and landowner companies apart from the State. Given the gravity of these implications, I will implore Newmont Corporation to carefully consider the national interest of Papua New Guinea in relation to the proposed merger. I will also reach out to the Prime Minister, seeking assurance that any government approval of the merger or the continuation of Newcrest mining licenses in PNG, including Lihir and Wafi-Golpu, be contingent upon the following preconditions:

1. Resident Newcrest shareholders in Papua New Guinea should receive Newmont shares or Papua New Guinean depository receipts, regardless of the size of their holdings.
2. Newmont lists its shares or depository receipts on the Papua New Guinea Stock Exchange (PNGX), allowing local investors to participate directly in the country's largest mining company.

Photo: Porgera Mine

New Porgera Limited (NPL) is pleased to announce that it recently filed an application with the Mineral Resources Authority (MRA) for a Special Mining Lease and supporting tenements for the Porgera gold mine.

Chairman of Kumul Minerals Holdings and Director of New Porgera Limited, Dr IIa Temu, hailed the lodgment of the application by NPL as a significant step towards the restart of the mine.

“The lodgment of the SML application is an important milestone for the reopening of the Porgera gold mine. This follows the approval and registration of the transfer of Exploration Licence No. 454 and SML 11 to New Porgera Limited and the subsequent surrender of SML11 and all ancillary tenements by NPL. The application will now be subject to the normal regulatory assessment process which will include the Minister for Mining convening a Development Forum in accordance with the requirements of the Mining Act to canvas the views of stakeholders. New Porgera Limited will work cooperatively with the MRA and other State agencies to enable them to complete the regulatory assessment process as soon as possible.” Dr Temu said.

Barrick Gold President and Chief Executive Officer, Dr Mark Bristow, congratulated NPL on reaching this key milestone towards the mine’s restart.

“The lodgment of the SML application is a big step forward on BNL’s journey with the State to reopen the mine as true partners. The parties are now focused on satisfying the remaining conditions under the New Porgera Commencement Agreement. In parallel, and in our role as operator of New Porgera, BNL is undertaking certain preparatory work on the processing plant with the support of the MRA and is building a committed team, the majority of whom will be Papua New Guineans,. We are moving ever closer to enabling the people of the Porgera Valley to finally see the ‘white smoke’ they have been waiting for”, Bristow said.

About NPL

The applicant for the new SML, New Porgera Limited, is a company owned jointly by Kumul Mineral Holdings Limited (which holds the equity on behalf of the State), Barrick Niugini Limited and Mineral Resources Enga Limited, with a further 10% of the equity reserved for PNG stakeholders. Over the life of mine, PNG shareholders will receive 53% of Porgera’s overall economic benefits. BNL will receive the remaining 47%. The proportion of equity and economic benefits that belong to the landowners is a first in PNG’s agreements with international investors.

Parties to the K92 Mining project Memorandum of Agreement (MoA), successfully concluded a two-days consultative meeting in Goroka on May 31-June 1, creating a pathway towards finalizing the MoA that was initialed in 2020 in Kokopo, East New Britain Province. 

The parties are the State, the Eastern Highlands Provincial Government (EHPG), the Agarabi Rural Local Level Government (ARLLG), K92 Mine Limited, the Bilimoia Landowners Association (BLA), and the Associated Landowners.

The stakeholders identified key action items which must be completed in two months after which time, it is anticipated that a date for the finalization of the initialed 2020 MoA review will be set.

The action items are: 

1) The National Content (NC): 

• a) Business Development and procurement/supplies plan/guideline. This is developed by the Department of Commerce & Industry (DCI). The plan is a guide by which landowner companies like the BLA can potentially participate, in business spin-offs contracted out by mines. The DCI will engage with K92 Mine, to ensure that the company’s business development plan is aligned with the NC and relevant laws. The DCI will also engage with the BLA to discuss their business plans and aspirations. 
• b) Labour & Employment – This is a training plan developed by K92 Mine which the Department of Industrial Relations will engage with K92 Mine on, to ensure labour laws are complied with. The department will also engage with the BLA to discuss their plans in terms of employment and training.

2) Lands Commission (formally Land Titles Commission) – The LC will set a budget for a hearing and circulate to the parties for budgetary commitments and contributions.

 

3) MoA – The BLA will submit to all parties a list of additional benefits to include in MoA for parties’ consent.

 

All parties have been urged to work towards completing their tasks so that the initialed MoA can be signed and implemented.

 

Chairman of the meeting Andrew Gunua, thanked leaders of all parties for their commitment, respect and understanding during the meeting, despite challenges and the different dynamics experienced.

 

The leaders are the BLA Chairman Johnson Uringke, K92 Mine’s Vice President External Affairs & Sustainable Development, Philip Samar, Eastern Highlands Provincial Administrator Allen Los, Agarabi Rural Local Level Government President Honourable Pangu Edward, leaders of the Associated Landowners, and State Team leader Michael Wau.

 

The leaders expressed satisfaction on the outcome of the meeting adding that they would work together for the common good of all parties, especially the landowners of the project.

 

MOAs are benefits packages that parties negotiate. These include royalites, Tax Credit Schemes, Special Support Grants (SSG), business development and training & development amongst others.

Photo: PNG Government Secures 60 Percent in Wafi-Golpu Mine Project, PM Marape announces

The Papua New Guinea Government has finally settled on the total benefit sharing at over 60 per cent from the Wafi-Golpu project.

Prime Minister James Marape, in addressing the Morobe Tutumang in Lae, said the total benefits sharing included taxes, equity, royalty and also an additional social fee for the environment around the project area.

“The framework that was signed in Port Moresby recently is a guide on how best the Government, the developer and the resource owners will be working with each other to take the project from this point on,” he said. Marape added under the recently signed MoU framework, the Government had secured a “better defined royalty”.

PM Marape also explained that according to the law the developer could only pay two per cent.

“This is the case with resource owners from other projects in the country.

PM Marape said there were three layers of deductions on that two per cent.

The Prime Minister said that was why the Morobe government had pushed for the royalty percentage to be taken up to five per cent and reduce the equity to 20 per cent. He said considering the demand from the Morobe government, the State had to adjust the numbers to add up the monetary value of the total benefit and settled for 3.5 per cent.

PM Marape explained that the 3.5 per cent that was settled for was just K100 million less compared to the original five per cent.

“The Government also secured an additional 10 per cent equity on total benefits sharing because the previous government’s agreement was to forfeit 10 per cent of the benefits as royalty to settle for just 20 per cent equity,” Marape said.

PM Marape explained that was why former governor Ginson Saonu took the matter to court.

“So through the court, we recouped that 10 per cent in equity,” Marape said.

PM Marape confirmed that the financing of that additional 10 per cent would be done similar to the Porgera project.

“Seventy per cent of that additional 10 per cent equity will be raised by the developer while the government balances it,” PM Marape said.

"This additional 10 per cent has been fully secured and is for the people of Morobe.

Photo: (L-R) President Anthony Smaré – PNG Chamber of Mines and Petroleum, Paul Hueper – Director of Energy and Mineral Programs for the Bureau of Energy Resources, US Department of State with his colleagues on the right, and MRA’s Managing Director Jerry Garry (centre) at the Prospectors & Developers Association of Canada (PDAC) in Toronto, Canada early in March 2023 promoting investments in PNG’s mineral sector.

Papua New Guinea (PNG) has been ranked as one of the least attractive jurisdictions globally for mining investment according to the Annual Survey of Mining Companies published last week by the Fraser Institute, an independent, non-partisan Canadian policy think-tank.

President of the PNG Chamber of Mines and Petroleum, Mr Anthony Smaré has called for urgent dialogue with National Government and all stakeholders to address this decline in PNG’s international standings. “The results of the Fraser Institute Global Survey shows how much PNG has fallen as an international destination for mining investment and needs to be urgently addressed if we are going to preserve this industry to benefit future generations beyond our current operating projects. If we want this industry to have a future, to continue to provide employment, business opportunities, royalties, dividends, taxes and other benefits for future generations, it is imperative that all stakeholders, led by the National Government, take note of these survey results, and engage in dialogue to urgently address the policy matters deterring investment in PNG, particularly regulatory uncertainty and aspects of our taxation incentives.”

The Fraser Institute’s global mining survey is the most comprehensive report on government policies that either attract or discourage mining investors. This year’s report ranks 62 jurisdictions around the world based on their geologic attractiveness (minerals and metals) and government policies that encourage or deter exploration and investment. PNG is ranked in the bottom seven countries in both Investment Attractiveness and Policy Perception.

In 2018, PNG ranked 41st out of 83 jurisdictions in the Investment Attractiveness Index and has now slipped to 54th out of 62 jurisdictions. PNG has slipped from ranking 61st out of 83 jurisdictions in the Policy Perception Index in 2018 to a new low of 57th out of 62 jurisdictions in 2022.

This decline in PNG’s standings is reflected in the significant drop off in exploration activity in PNG over the last 10 years. Records from the Mineral Resources Authority (MRA) indicate a steady decrease in the number of explorations licenses issued since 2012 from 177 Exploration Licenses (Els) granted and 379 applications awaiting processing to the June 2022 numbers of 158 granted and 112 applications.

The Global Survey assesses how mineral endowments and public policy factors such as taxation and regulatory uncertainty affect exploration investment. The survey was circulated electronically to approximately 1,966 individuals between August 23rd to December 30th, 2022. Survey responses have been tallied to rank provinces, states, and countries according to the extent that public policy factors encourage or discourage mining investment.

An overall Investment Attractiveness Index is constructed by combining the Best Practices Mineral Potential index, which rates regions based on their geologic attractiveness, and the Policy Perception Index, a composite index that measures the effects of government policy on attitudes toward exploration investment.

Neighbouring Australia continues to be the most attractive region in the world for mining investment. Western Australia (2nd), Northern Territory (6th) and South Australia (9th) appeared in the global top 10 on the Investment Attractiveness Index in this year’s survey. Zimbabwe ranks as the least attractive jurisdiction in the world for investment with PNG slightly higher.

The ranking is a result of the survey responses from participants comprising of managers, executives mainly company presidents around the world in companies involved in mining exploration, development, and other related activities. All these respondents indicated that PNG’s legal system, infrastructure, political stability, and quality of the geological database are the main policy factors deterring investment.

Alarmingly, the report is an indication of how low PNG ranks globally, in terms of investability in the mining sector as the survey was designed to identify countries that have the most attractive policies for encouraging investment in mining exploration. And countries that investors assess as relatively unattractive may therefore be prompted to consider reforms that would improve their ranking. The Global Survey can be found here https://www.fraserinstitute.org/studies/annual-survey-of-mining-companies-2022 

Photo credit: NIT

Field research and investigations will begin next week as part of the work being done under the Panguna Mine Legacy Impact Assessment.

The field research will be carried out across mine-impacted areas and will involve identifying and assessing any environmental impacts of the Panguna Mine since mining was stopped in 1989, and the social and human rights that are directly connected to these environmental impacts.  

ABG Member for Ioro Constituency Hon Theonila Matbob says these field investigations are a critical activity to be undertaken under the Assessment.

“We are in full support of the field work team as they begin Phase One of the Panguna Mine Legacy Impact Assessment. The data they will be collecting will play a crucial role in this whole process. It is important that we work together to support this team in doing their work by providing a safe and cooperative environment for them to complete their research. This will help ensure the best data collection possible, helping this process to understand the impacts the mine has had on the surrounding areas and people.”

The field investigations will be completed across the Panguna Mine affected area in selected high-risk areas including: the Loloho port, in and around the Panguna Mine; the river system including the Kawerong River, Jaba River, Kuneka Creek and areas impacted by tailings deposition, and the delta area where the rivers system enters the Empress Augusta Bay.

The field investigations will be carried out by experienced scientists made up of Bougainvilleans, Papua New Guineans and international experts under Tetra Tech Coffey.  

They will be collecting data from water, soil and air samples, as well as conducting interviews with local people from the impacted areas. Additional data collection will also include aerial surveys (from a plane) known as Light Detection and Ranging (LiDAR) surveys, as well as gathering information from weather stations setup for the study.

The data and findings from the completed Phase One of the Panguna Mine Legacy Impact Assessment will be presented in mid-2024 to the Oversight Committee and will be translated and shared back with the impacted communities.

Earlier this month, ABG President Hon. Ishmael Toroama called on all leaders, landowners and people to allow the assessment to be completed, saying that there has to be results that can guide the government and the company to resolving the problems from the mine.

Photo: Bryan Slusarchuk. Credit: Bryan Slusarchuk LinkedIn Page

Fosterville South Exploration Ltd (FSX) has recently announced its agreement to acquire a significant 2166 sq. km mineral exploration land package in Papua New Guinea (PNG) from Wild Dog Resources Inc (WDR), a privately held company. This package includes multiple exploration licenses (EL) and exploration license applications (ELAs) containing both early stage and advanced stage exploration targets with high-grade epithermal vein and porphyry style mineralization.

FSX CEO Bryan Slusarchuk is confident that the acquisition will put the company in a strong position to advance the projects on the ground, following up on the substantial amount of fieldwork and development of drill targets already completed by WDR over the past two years. The FSX team members have significant experience operating within Southeast Asian Island arc epithermal and porphyry mineralization environments, and specifically in PNG.

“Papua New Guinea is home to multiple world-class mining, development, and exploration projects and the country hosts some of the most incredible geology on earth," said Slusarchuk. "Through the rapid growth of K92 Mining in PNG, the recent announcement regarding Wafi-Golpu moving forward, and the ongoing corporate discussions between Newmont and Newcrest, the amazing mineral potential of PNG is becoming more widely known. Many shareholders of FSX have invested in the PNG mining sector and we are confident they will share management’s enthusiasm for this acquisition.”

WDR CEO Alan Martin also expressed his excitement for the deal, stating that the company has assembled a commanding land position within the heart of one of the world’s best regions for gold and copper exploration. "Putting together these projects, developing excellent community relations, and then advancing targets through fieldwork has put WDR in a position to now take the next step in PNG. Through this transaction with FSX, we are emerging as a company with a very strong cash position to deploy on the ground and a team with a track record of success in PNG within a superb share structure."

The acquisition will give FSX a strong foothold in PNG, a region with a rich history of mining, development, and exploration projects. The total land package to be acquired by FSX includes both early stage and advanced stage exploration targets with high-grade epithermal vein and porphyry style mineralization present. This provides FSX with a significant opportunity to expand its operations and potentially make significant discoveries.

Moreover, the deal will make WDR shareholders large shareholders of the combined entity, and they will work together with FSX within this well-funded entity to explore for Tier 1 Copper-Gold deposits in PNG. The merger is expected to unlock the potential of the assets, and both companies are optimistic about the outcome.

Photo: Porgera Mine

Kumul Mineral Holdings Limited (KMHL), Barrick Niugini Limited (BNL), and the New Porgera Limited (NPL) signing two crucial documents on Friday marks a significant step towards reopening the Porgera mine. The Porgera mine, located in Enga Province of Papua New Guinea, was closed down in April 2020 after the government refused to extend Barrick’s lease for another 20 years. Since then, the parties have been negotiating the terms of reopening the mine.

The documents signed by the parties include the DEED of transfer for the Exploration license (EL) 454 and the DEED of transfer for the Special Mining Lease (SML) 11 and ancillary tenements. The signing ceremony took place in Port Moresby and was attended by KMHL board of directors and BNL Country Manager and Adviser.

Dr Ila Temu, the KMHL Chairman, explained that the SML 11 license that Kumul Mineral holds needed to be surrendered, hence the signing of the transfer to the New Porgera Limited. Dr Temu stated, "The parties have agreed that SML 11 has to be surrendered, and a new SML applied for."

He further explained that the exploration license 454, which had the Porgera license issued on it, belongs to Barrick Niugini Limited, and they have decided to transfer it to New Porgera Limited as part of the consolidation. Once New Porgera Limited receives the exploration license, it will apply for a new SML after surrendering SML 11.

The Mineral Resource Authority (MRA) is now processing the two transfers, and Dr Temu said they have given urgency for the application to be processed within the next two months, hoping that the new SML will be issued within this period.

"The rest of the agreements like the Mining Development contract need to be signed off after the SML is issued and the environment transferred. This is because the environment permit was issued to all SML so it had to be transferred from the old SML to the new SML that will be issued. That should complete the process, and I think it is going to take us a balance of this first part of the year, including quarter 1, 2, and maybe quarter 3," he added.

The reopening of the Porgera mine is significant for Papua New Guinea as it is the second-largest mine in the country, producing around 600,000 ounces of gold and 600,000 ounces of silver per annum. The mine's reopening will generate employment opportunities and contribute to the country's economic growth. It will also bring relief to the local community, which has been severely affected by the mine's closure.

BNL Country Manager and Adviser, Tony Esplin, expressed his satisfaction with the progress made towards reopening the mine. He said, "We are very pleased to have reached this important milestone in the process of reopening the Porgera mine. We look forward to continuing our work with our partners to bring the mine back into operation."

Photo: Minister for Mining Hon Ano Pala (right) awarding the certificate of long service to Mr. Carter Oiee (left) while acting MD Mr. Jerry Garry looks on (back)The Mineral Resources Authority (MRA) on Friday April 14th, celebrated its 15 years of operations in Port Moresby. 

The occasion was graced by the presence of the Prime Minister Honourable James Marape, and the Minister for Mining Honourable Sir Ano Pala. Main highlights of the occasion were the launching of the Mineral Production Data Center, and the MRA Corporate Plan 2022-2027 by Prime Minister Marape.

Other important guests at the event were the MRA Board Chairman Benny Kimisive and the Secretary of the Department of Mineral Policy & Geohazards Management (DMPGM), Harry Kore. The PNG Mining Industry was also represented by the PNG Chamber of Mines & Petroleum executives. Staff based in the mining host provinces were flown into Port Moresby, to join the rest of the MRA staff members at the event.

Staff who have served the organization for 15 years were awarded certificate of Long Service.

Hon Marape congratulated the staff of the MRA saying that the MRA was an important organization in the government set up, as it regulates the very sector that had been driving the country’s economy since independence. He said without MRA, there would be no regulation, supervision and oversight of the mining industry.

Minister Hon Sir Pala told the staff members that they were a special group of people, tasked with an important responsibility to ensure that all systems required to regulate the mining industry, work effectively.

Mr Kimisive said the board had provided strategic guidance to the MRA management to achieve its milestones. These milestones include the completion of the annual financial audits, Public Investments Program (PIP) audits, the setup of the Mineral Production Data Center and the Corporate Plan 2022-2027.

Acting Managing Director Jerry Garry acknowledged and thanked former Prime Ministers, Ministers of Mining, former Managing Directors of the MRA, and former and current staff, who served the State and the MRA since the establishment of the authority.

He said the MRA was what it is today because they all contributed towards building the organization. The AMD said the organization had achieved a lot since its establishment 15 years ago.

He highlighted milestones achieved over the years. These include the transition to online tenements management system, compilation of geology mineral occurrence structures which are available online, establishment of PNG drill-hole data base, improvement in mine safety records, increase in the total export revenue from minerals, increase in mineral exploration activities and expenditure.

Staff representative Vele Gavu thanked past and present political leaders and management of the MRA, for having the foresight in the creation of the MRA, and ensuring that staff well-fare is well taken care of.

Photo credit: MRA

Mineral Resources Authority (MRA) managing director, Jerry Garry, has emphasized the importance of exploration in ensuring the future of Papua New Guinea's mining industry. Speaking at the agency's 15th-anniversary celebration in Port Moresby, Garry highlighted the vital role that exploration plays in the development of mines.

"If you do not have exploration, you do not have a mine," said Garry. "Before MRA's establishment, the total exploration Kina spent on grassroots and advanced projects in the country were well below K100 million per annum. After the establishment of the MRA, the exploration expenditure increased and peaked at around K370 million per annum, that in itself is a testimony in MRA's achievement."

Current advanced exploration projects progressing into mine development stage include Wafi-Golpu, Frieda River, Woodlark gold mine project, Central cement lime project, Oro nickel and cobalt project, and Misima mines. Garry also highlighted the importance of alluvial mining in the sector, which has grown from earning less than K100 million to K640 million per annum under the MRA's supervision.

"Looking at the small-scale mining training center (in Wau, Morobe), they have trained and certified more than 6,000 artisanal miners since its establishment in 2008," said Garry. "That is why we have a K640 million export revenue in this sector, it is the effort of the training center."

While Papua New Guinea's mining industry has seen significant growth in recent years, Garry cautioned that all major mineral reserves in the country will be depleted by 2063. "By 2063, all the major reserves we have in the country will be depleted," said Garry. "That includes Wafi-Golpu and Frieda River projects."

Garry stressed the need to invest in the next layer of deposits to sustain the mining business in the country, stating that the only way to achieve this is to explore deeper. "We need to invest in the next layer of deposits to sustain the mining business in the country," said Garry. "And the only way to do that is to go deep because those deposits or assets in the surface have already been tested."

Despite this challenge, Garry was optimistic about the future of Papua New Guinea's mining industry. "We need to look at the future and the next big thing, and we need to invest in exploration," he said. "The future of the mining industry is very bright, and we can only make it happen if we all work together and invest in the right areas."

Garry's remarks were met with support from industry stakeholders. Peter Graham, managing director of Wafi-Golpu Joint Venture, stressed the importance of exploration to the industry's future. "Exploration is the lifeblood of our industry," said Graham. "We are exploring at depths never before contemplated, and our joint venture has the potential to provide significant long-term benefits to the people of Papua New Guinea."

Similarly, Richard Robbins, managing director of Highlands Pacific, emphasized the need for collaboration between the government and industry to ensure the sustainability of the mining sector. "It is essential to maintain a healthy and collaborative relationship between industry and government to maximize the benefits of mining to the people of Papua New Guinea," said Robbins.

As Papua New Guinea's mining industry continues to grow, the focus on exploration and sustainable mining practices will be crucial to ensuring its long-term success.

Photo: Aerial view of the Porgera gold mine. Credit: Zijin Mining

In recent years Papua New Guinea has been ranked as one of the most natural resource-dependent economies in the world and has been seen as an example of the cruel ironies that often go simultaneously with big extractive industries which are supposed to lead to the development and lead people out of poverty but yet, on the contrary, the situation only seems to worsen.

PNG is undoubtedly an incredibly beautiful country with pristine beaches along the coastal shoreline and stunning mountain landscapes, valleys, and rainforests up in the highlands, which are sparsely populated in most parts. Natural resources form the backbone of the country's economy, especially mining, timber (logging), and oil with the inclusion of the enormous LNG projects that are in the pipeline which are mostly headed by Exxon Mobil and Total Energies.

Barrick's Inception

Porgera is one of Papua New Guinea’s longest-running goldmines. Operating for over 30 years in the highlands province of Enga, this large mine was expected to produce around 250,000 ounces of gold in 2019. It employed more than 5,000 people and the 5% landowner and provincial equity stake had helped to fast-track the efforts to bring services and education to one of the country’s most remote provinces.

The Porgera Joint Venture (PJV) was created in 1988 with the shareholding split between Placer Pacific (30%), Highlands Pacific (30%), Renison Goldfields Consolidated (30%) and the PNG government had a small 10% equity. [1]

Barrick Gold, a Canadian company that is also the World's largest producer of Gold acquired its interest in the Porgera Joint Venture in 2006 and through its subsidiaries in the country, the company held a 95% stake in the operation with the remaining 5% being held in equal partnership with the Enga Provincial Government and the traditional Ipili landowners. Barrick had agreed to continue production until 2023 before the closure of the mine in 2020. [1]

Since the Porgera Gold mine opened in the 1990s it has likely produced around 16 million ounces of gold and at today's price that would be worth more than K40 billion.

The mine is the vocal point and lifeline of everything that happens in Porgera, 12% of PNG's export earnings had come from the Porgera Gold mine but despite all the wealth it had gained the recent outcry by the people of Porgera the mine reopened has stated otherwise. [2]

Reports since the closure of the mine in the local media still show that the mining township and its surrounding areas still suffer from grinding poverty and a lack of basic government services. [2]

Mine's Closure - Porgera and Politics

Late in April 2020, in the middle of a global pandemic and brewing domestic economic crisis, the PNG government made the surprising announcement not to extend the mining lease on a goldmine that contributes roughly 10% of the country’s total exports. The mine had been closed following the government’s decision not to renew BNL’s special mining lease. A subsequent legal battle and an April 2021 agreement ceded majority ownership of the mine to ‘PNG stakeholders’ while securing BNL’s status as the mine’s operator. [3]

Before the mine's closure, Porgera was a joint venture between Barrick Gold (47.5 per cent), Zijin Mining (47.5 per cent), the Enga government (2.5 per cent), and the Porgera landowners (2.5 per cent) while the Government had no stake or equity in the gold mine. It only earned from what came out of corporate tax.[1]

The announcement not to renew the special mining lease for the Porgera mine was a shock, in particular to the mine’s operator, Barrick Gold, and their joint venture partner Zijin Mining.[3]

The decision on the closure of Porgera was reported widely as being mainly an attempt from the PNG government to harvest more bene benefits from existing projects and issue a stern warning to projects still in negotiation that they mean business.

When Prime Minister Marape was sworn into office in May 2019, he quickly set a narrative to “take back PNG”, arguing that the people of PNG were not getting their fair share of the benefits of the formal economy and major natural resource projects. During that period PNG’s slowly increasing and ongoing economic crisis was set to deepen in the fallout of Covid-19 and it was no surprise that the natural resources sector found itself in the crossfire, in this instance, the Porgera Gold mine was the one to take the fall.

At that time Prime Minister Marape had hoped Barrick would keep the mine operating while negotiating its exit. But the company’s firm refusal of that option and its immediate shutdown of the mine had demonstrated its bargaining power. Since then, Barrick and all stakeholders have been in negotiations with the government to have the mine reopened.[4]

While the government had seemed within its rights not to renew the lease, the unexpected announcement had led Barrick to hit out, by stating the move was the same as nationalization without prior notice and due process. [4]

According to PNG Report, the Porgera closure had cost 4,000 jobs and about K110 million in losses for small and medium enterprises servicing the Barrick-owned mine in Enga Province. Porgera Chamber of Commerce and Industry president Nickson Pakea said those affected included around 700 SMEs and 176 contractors.

Negotiation Process

During the past three years, ongoing negotiations between Barrick Gold and the government to reopen the mine have not yet come to fruition but are eventually taking a favourable course. The issues surrounding one of PNG's longest-serving mines and a significant contributor to the country's GDP have been closely scrutinized by both domestic and foreign interests who have links and have been benefactors of the mine.

Porgera has been on care and maintenance since April 2020 when the government declined to renew its special mining lease to which Barrick Niugini Limited (BNL) has spent more than a billion kina on care and maintenance since the mine was closed in 2019.[5]

Early this year, Deputy Opposition Leader Douglas Tomuriesa had suggested that the government re-negotiate and seek a 25 per cent shareholding in the Porgera gold mine, not 51 per cent.[6]

Tomuriesa pointed out that the Government also needed to be making money.

“Just admit that you were wrong or the advice you were given was wrong and go back and fix this so that the mine can operate again, and the country can make money,” he said.

“Realistically, how can we demand 51 per cent ownership, when we have contributed nothing?

At this rate we are going, we are starting to chase investors out of the country. “Who will want to do business in the country or invest here when our demands are unrealistic?”

Tomuriesa urged the Government to renegotiate a 25 per cent ownership, a 25 per cent share for economic benefits, to allow the mine to start operating.

“They can come up with an agreement where the 25 per cent has to be within the year and leave the other 25 or 26 per cent open for negotiations, which can be something they can go back and forth with but allow the mine to start operating,” he said. [6]

In light of this, Prime Minister Marape issued a statement stating that Barrick is committed to reopening the mine and the Government through Kumul Mining Holdings Ltd as a partner is also committed to reopening the mine. PM Marape is adamant that the re-opening of the mine should occur sometime this year.

In relation, The Lease for Mining Purposes chairman Timothy Andambo said re-opening the multi-million Kina Porgera gold mine would ease the country’s foreign exchange shortage issue. He stated that Porgera was a national asset and can generate the foreign currency ($US Dollars) that this country desperately needs.

Likely Recommencement

After a lengthy negotiation process at the back end of last year (2022) towards the first quarter of this year (2023), The Porgera gold mine has been looking steadily to get on track to resume operations later this year after the government and Barrick Niugini Limited agreed on a partnership for its future ownership and operation. [7]

The early recommencement of the mine, preferably within the first half of this year was critical for the country, as the lead time required for mobilizing resources and the significant start-up capital needed to get the mine back into its full operating capacity would be a challenge.[7]

Under the terms of a binding framework agreement signed by Governor General Sir Bob Dadae and Barrick Gold Corporation President and Chief Executive Mark Bristow, ownership of Porgera will be held in a new joint venture owned 51% by PNG stakeholders and 49% by BNL in which BNL will remain the operator of the mine.[8]

The framework agreement also provides, among other things, for

• PNG stakeholders and BNL to share the economic benefits generated over the life of mine on a 53/47% basis,
• BNL to finance the capital required to restart the mine,
• An increase in the equity allocated to a broad group of landowners who are the customary owners of the land where Porgera is located,
• And the state retains the right to acquire the remaining 49% of the mine from BNL at fair market value after 10 years.

The parties will now work towards the signing of definitive agreements at which time full mine recommencement work will begin.

Prime Minister James Marape said the framework agreement, reached after months of negotiation, was a historic development, which would benefit PNG for many years to come, and set the precedent for future projects.

“I thank Mr Bristow and his team for recognizing our nation’s aspirations and their willingness to partner with us in realizing this vision at Porgera,” he said.

President and CEO of Barrick Gold Mark Bristow said, on behalf of BNL’s joint venture partners Barrick and Zijin Mining, was delivering on its promise of reaching a fair agreement on the future of Porgera for the benefit of all its stakeholders, notably the local community, Enga province and the PNG government.

“We intend to partner with all key stakeholders to make Porgera a world-class, long-life gold mine,” he said. [8]

Final Outstanding Issue - Taxation

About the news of reopening, it was revealed that there was a clause inserted in the New Porgera framework agreement in which the resolution of Barrick’s old tax liabilities was a condition for reopening the mine. Since then, the taxation matter surrounding Barrick's past operations at Porgera Mine was put under the spotlight.

Internal Revenue Commission (IRC) Commissioner-General Sam Koim when responding to a statement by PM James Marape said the “old Porgera” tax issues relating to Barrick (Niugini) Limited should not be used as an excuse to delay the reopening of the Porgera mine.[9]

These remarks were made by Mr Koim following Prime Minister James Marape’s statement which blamed the delay in the reopening of the mine on a “tax issue”.

“We are almost there. There is just a tax issue standing in the way of Porgera being reopened,” Marape said.

Furthermore, Barrick's chief executive officer Mark Bristow gave an ultimatum to the State parties to resolve all outstanding issues by March 31.

Regarding Bristow's ultimatum, Koim stated that Bristow did not mention what “outstanding issues” were holding up the reopening of the mine.

Barrick has insisted that the IRC accepts its position, even if it goes against the grain of the law but Koim stated “It seems Barrick is seeking a political solution to its legacy tax problems, some of which are very technical matters even for non-experts like me to understand.”

Koim thanked PM Marape and the Government for being “forthright in informing Barrick that the IRC independently administers tax matters, and the Government is not in the business of breaking its laws”.

“Barrick should not use the pressure of reopening the mine to force the Government to address its tax problems. The mine should reopen immediately while Barrick addresses its ‘old Porgera’ tax liability following the due process of law.

in response, Barrick (Niugini) Limited (BNL) said it was “deeply disappointed that the Commissioner-General of the Internal Revenue Commission has chosen to speak publicly about a confidential tax matter.

“The Income Tax Act requires that officers of the Internal Revenue Commission, including the Commissioner-General, treat as confidential the information and tax affairs of all taxpayers.

“BNL has always administered its financial affairs by the laws of PNG and believes the matter should be dealt with by the law and obligations of fairness and confidentiality.” [9]

Whilst the future of Porgera Gold Mine is awaited the outcome of its taxation issue, Marape's justification in simple is to gain better shares for the landowners and the Enga Provincial Government.

Mine Reopening underway

In the first quarter of 2023, during the month of March, Barrick Gold Corporation, the government of Papua New Guinea, and New Porgera Limited signed an agreement on Friday 31st March to resume operations at the Porgera gold mine.

The New Porgera Progress Agreement (NPPA), which was signed, confirmed that all parties are committed to reopening the mine at the earliest opportunity, in line with the terms of the Porgera Project Commencement Agreement and the New Porgera Limited Shareholders Agreement, both of which were concluded in 2022.

The New Porgera project team will now proceed with the filings for a special mining lease and progress the other conditions set out in the Commencement Agreement for the reopening of the mine.

New Porgera's equity at 51% is shared by Papua New Guinea (PNG) stakeholders, including local landowners and the Enga provincial government. Economic benefits will be shared 53% by the PNG stakeholders and 47% by Barrick Niugini Limited, which will operate the mine. [10]

 

References:

1. http://www.porgerajv.com/Company/Our-Story

2. https://www.pngbusinessnews.com/articles/2023/1/women-groups-in-porgera-call-for-immediate-restoration-of-government-services-in-district-mine-closure-is-not-making-peoples-lives-better

3. http://www.porgerajv.com/Company/Media/Press-Release/Porgera Mine Temporarily Suspends Operations/Saturday, April 25, 2020

4. http://www.porgerajv.com/Company/Media/Press-Release/Update on Porgera Negotiations/Saturday, October 17, 2020

5. https://www.pngbusinessnews.com/articles/2023/1/barrick-niugini-limited-clarifies-its-stance-on-porgera-s-current-progress

6. https://www.thenational.com.pg/renegotiate-porgera-shares-to-25-per-cent-says-tomuriesa/February 13th, 2023

7. Luma.D  https://postcourier.com.pg/porgera-reopening-process-almost-complete-says-vele/February 15th, 2023

8. https://www.barrick.com/English/news/news-details/2021/Porgera-Mine-Set-to-Restart-as-PNG-and-Barrick-Niugini-Limited-Agree-New-Partnership/default.aspx

9. https://www.thenational.com.pg/porgera-mine-tax-debate/ January 27,2023

10. http://www.porgerajv.com/Company/Media/Press-Release/Barrick Steers PORGERA GOLD MINE Back towards world-class production -March 31, 2023