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Mining

PNG Business News - January 18, 2021

Geopacific Resources Needs Necessary Permits Before Operating

Geopacific Resources Ltd has said that it needs all the necessary permits and approvals before it can start its operations. Geopacific Resources Ltd, the operator of the Woodlark gold project in Milne Bay, said that it has already obtained key approvals for the development, but it needed to secure all approvals, licences, or permits. “Even if an apparently viable mineral deposit is identified, there is no guarantee that it can be profitably mined,” it said. “The estimated development costs for the Woodlark gold project are subject to a range of uncertainties and assumptions. And the actual development costs may differ from these estimates and assumptions. If the cost estimates and the underlying assumptions are not realised in practice, it may materially and adversely affect the development programme of the Woodlark gold project. The actual Woodlark gold project development timelines and expenditure together with planned exploration work to be undertaken will depend on many factors. As such, actual expenditure may differ from the budgeted expenditure presented.”The mining firm said the project is also subjected to ordinary construction risks such as design and or quality issues, delays, pricing and cost overruns. “Contractor performance may be constrained or hampered by labour disputes, plant, equipment and staff shortages, and default,” it said. “Contractors may not comply with provisions in respect of quality, safety, environmental compliance and timeliness, which may be difficult to control. In the event that a contractor underperforms or is terminated, the company may not be able to find a suitable replacement on satisfactory terms within time or at all.”

Mining

PNG Business News - January 12, 2021

Mayur Resources to Develop PNG's First Iron and Industrial Minerals Project

Following the lodgement of a mining lease (ML) application of its Orokolo Bay project in the Gulf, Mayur Resources Ltd says it is on its way to developing the first iron and industrial minerals project. According to the firm, the application is about the full-scale development of the project with a planned saleable production rate of 0.5 million tonnes per annum (Mtpa) of vanadium titano-magnetite (VTM) and dense medium separation magnetite. This is also expected to produce 8,000 to 10,000tpa of a zircon rich heavy mineral concentrate and one Mtpa of high-grade silica construction material.The Mineral Resources Authority (MRA) will now assess the application. According to Mayur Resources Ltd managing director Paul Mulder, this was the final step of the project for it to be shovel ready. “As Mayur’s second project to be advanced to final legislative approval in PNG, Orokolo is a simple, onshore, near-surface mining and processing operation with no requirement for grinding or chemical processing and a capital cost of only US$22 million (K77.19mil),” he said. “We, therefore, anticipate being able to work quickly with the MRA on this assessment. We’ve secured funding for the project which will not require further dilution and is exposed to an attractive forward-looking earning profile from next year.”In the definitive feasibility study (DFS), the financial analyses used a pricing assumption for the VTM product founded on a cost of conservative long-term iron ore price of US$66.30/t (K231).“This compares to a current iron ore price above US$150/t (K175), a major potential upside to the economics of the project,” he said. “In addition to the supportive iron pricing, and subsequent to the completion of the DFS, considerable work has also been undertaken and continues to be progressed to assess the suitability of the Orokolo Bay material to supply Singapore’s construction sector that imports huge amounts of this material. This potential opportunity is in addition to the supply of material to the Sydney market.”He added that he was excited for the opportunity of establishing a mechanised sago harvesting operation post-mining. “Our plan is to provide the community with sustainable employment and revenue opportunities that will continue well beyond the life of the mine, where sago production can serve both local demand and also be transported and sold in the larger Port Moresby market,” he said. “The MRA’s consideration of our application will occur in parallel with Orokolo’s pilot plant bulk sampling activities, for which the key plant and equipment is awaiting shipment into PNG. Construction of the pilot plant and the full-scale operation may overlap depending upon the timing of the mining lease approval process and the easing of the Covid-19 travel and transport restrictions into PNG.”

Mining

PNG Business News - January 04, 2021

Harmony Gold Targets Lease Extension

In its 2020 operational report, Harmony Gold said that in 2021, the target is to safely mine the present cutback to have a production between 172,300 and 177,700 ounces while at the same time, beginning the next planned pushback of the main Hidden Valley pit. The report said, “Our aim is to obtain a renewal of the mining lease to support a proposed mine life extension beyond the current plan. In 2020, Hidden Valley’s safety and injury frequency rates are industry-leading and the operation achieved a fourth consecutive year of zero fatalities and recorded more than two million fatality-free shifts. This is testament to the culture of zero harm, safety coaching and leadership, as well as the use of critical control management that has been embedded operationally to drive safely.”Its gold production, however, reduced by 22 per cent to 4,872kg and came out with an operating free cash flow of K871 million. This makes it the group’s second-largest contributor to operating free cash flow in 2020. “Hidden Valley achieved an all-in sustaining unit cost of R562648kg (average gold price received), due to lower gold production in 2020 as a result of lower mined grade as the mine transitioned between various stages of the open pit,” it said. “Higher inventory adjustments and additional costs due to the Covid-19 controls, offset by reduced operating and sustaining capital expenditure year on year. Despite the challenges associated with the Covid-19 pandemic and the 14-day mill stoppage in January, caused by a fault in the mill’s electronic management system, Hidden Valley was able to increase the volume milled by 0.5 per cent to 3.9Mt (tonnes), although the recovered grade declined to 1.25g/t (grades), resulting in lower gold production.”It added, “In addition to a planned mine life of four years, a pre-feasibility study for the life-of-mine extension has been completed which considers a two to three-year mine life extension and annual gold production of approximately 190,000oz. This study has now progressed to the feasibility stage, with study work expected to be completed during 2021.”

Mining

PNG Business News - January 04, 2021

Mori Approves Continuation of Freida River Project

After receiving the Sandaun government environment impact statement, Environment and Conservation Minister Were Mori has approved the Frieda River mining project to move forward - with safety and health protocols in place. This mining project has also the same characteristic and style to that of the Ok Tedi and the suggested Wafi-Golpu projects. “They are related and because of that, the nature of mineralisation is refractory, meaning there is the presence of sulphur,” he said. “And for us to develop and exploit the resources at Frieda, we have to put in place measures that will mitigate the impacts on the environment. In the not so distant future, I would like to have an audience with governors of both East and West Sepik and their provincial governments as to how we could move forward the Frieda River development.”He added, “Development can take place but it must be done with the understanding of both East and West Sepik. The potential impact on the Sepik River must be taken into account. The Sepik River has got a large catchment basin and all the creeks, tributaries that flow to the North of the Frieda River make their way down into the Sepik River. Currently, we have got ongoing issues pertaining to the environment. My department will ensure that in whatever we do to maximise the exploitation of our natural resources, we have to ensure that we do not destroy the environment.”

Mining

PNG Business News - January 04, 2021

Politics Creating Investment Uncertainties

The current political environment in Papua New Guinea is creating investment uncertainties.According to St Barbara Ltd, developer of the Simberi gold mine in New Ireland, proposed changes to the mining legislation would affect project economics in the future of the mine. General Manager of operations Jason Robinson said that the firm is working closely with the PNG Chamber of Mines and has been through engagements with key stakeholders.“Production commenced in 2008 with the St Barbara acquisition in 2012,” he said. “Simberi underwent an operations transition in oxide expansion in 2014, with production ramping up to over a hundred thousand ounces which is where we sit today. All-in sustaining cost fits in a range of AU$16.65 (K44.24) to AU$18.40 (K48.89) an ounce. With our current oxide reserves, we see mining continue until 2024 when we transition to software production with a further 10 years of mine life.”Robinson said the future of Simberi consists of two parts: uplift one ( maximise oxide resources), and uplift two (change to sulphide ore production). “With uplift one, we will utilise the building brilliance platform to maximise the value from the remaining oxide resources,” he said. “We’ll be aiming for best practice at Simberi despite the investment uncertainty with the Mining Act. We will act with an owner’s mindset with a view we’ll be operating the asset for a further 10 years. In uplift two, the long-term future of Simberi is to transition to sulphide ore processing. This will lift gold production above our current rates.”He added, “The production and cost profile remains relatively consistent over the coming years as we continue with oxide production. When we transition to sulphides, the production profile will increase as we target higher-grade sulphide ore, as our open pits increase with depth. It is time to build on that platform for the next phase of growth with sulphides. For the sulphide feasibility study, over the past six months, significant effort has been put in to understand and map out earning timeframes in detail with key milestone dates. It is worth noting that the sulphide expansion is a brownfield project extension of the existing operations.”

Mining

PNG Business News - January 04, 2021

Kainantu Resources Limited now Trading on Toronto Stock Exchange

Kainantu Resources Limited (KRL) has started trading on the Toronto Stock Exchange in Canada. Mining Minister Johnson Tuke extended his congratulations, adding that KRL is an emerging gold exploration company, proactively working with the people from PNG. “KRL brings an experienced regional team to PNG at the junior exploration level, and their management has already teamed well with PNG nationals who have spent their careers working in our mining industry,” he said. “I trust this level of co-operation will set the groundwork for KRL’s future prospects in the country.”The Mineral Resource Authority was glad to support KRL in its preparation for its public listing, saying that this is an example of a positive partnership that will benefit PNG and its people. “I am also encouraged by the community stakeholder support in Kainantu for KRL as seen at recent Warden’s hearings in the district,” Mr Tuke said. “It gives me great pride as the local member to see the community working with KRL to support their efforts, which will generate further investment in the Kainantu region over time.”He added, “I offer my congratulations to KRL as it continues its journey in PNG and joins the many existing miners already successfully operating in the country. The mining industry currently generates 26 per cent of PNG’s GDP and directly employs 20,000 people (and a further 30,000 people indirectly). As Minister, I stress the importance of mining to PNG’s economy and continue to encourage all levels of investment into the sector.”

Mining

PNG Business News - December 16, 2020

Researchers: Lime treatment on Porgera mine tailings neutralises toxic chemicals

Researchers from Australia and the US have come to the conclusion that treating mine tailing with lime aided in stabilising arsenic in soil and sediments around the mine - which results in preventing toxic chemicals from remaining dissolved in water and impacting people and the environment. This comes after researchers have conducted a study at the Porgera mine in Papua New Guinea - where they examined how climate and pH patterns work, specifically drying and wetting cycles, which impacts arsenic capture and storage. The tests have shown that the treated mine wastes rapidly released arsenic during rewetting, but the volume of arsenic released from the wastes decreased over time following repeated drying and wetting cycles. The journal Applied Geochemistry published the results of this scientific work, adding that the Porgera Joint Venture should continue with treating tailings with lime to limit arsenic mobility in the watershed. The lime at Porgera comes from a lime plant situated 7 kilometres away from the mine site. However, water comes from a reservoir at the Waile Creek which contains 7 million cubic metres of water. Waile CreekThe findings are relevant as Porgera was permitted to open again after the Marape administration and the Barrick Gold came to an agreement, following months of legal feuds and negotiations. Since April, Porgera operations had been suspended after its lease had expired and was not renewed.

Mining

PNG Business News - December 16, 2020

OTML Declares K400M Dividend

Following payment of an interim dividend of PGK150 million last September, Ok Tedi Mining Ltd (OTML) has said that the OTML Board has a final dividend of PGK400 million for 2020.According to Chairman Sir Moi Avei, in spite of the health crisis, “OTML has had a strong and profitable year and this has enabled the Company to complete the PGK800 million self-funded investment in the Crusher Replacement Project, distribute PGK550 million to our shareholders and retain a strong and debt-free balance sheet”. He added, “I’m grateful to the management and staff of OTML, as well our business and community partners for their efforts and resilience during a particularly difficult period.”OTML Managing Director and CEO, Musje Werror, said: “I am proud of the way OTML had responded to the challenges we have faced this year. The Company suspended operations in August and September 2020 in response to reported cases of COVID19 on site. This was in addition to two periods of lockdown. A number of major changes to the business were necessary to resume operations without compromising the health and safety of our employees, business and community partners. This year’s performance would not have been possible if it wasn’t for their collective effort and support.”Musje said that OTML was glad to have made a contribution to the economy this year - with more than $1bn of foreign currency earnings. This puts more than $550 million into the local currency market such as supporting the airline and the hotel industry.

Mining

PNG Business News - December 16, 2020

Geopacific Raises A$140 million for Woodlark Gold Project

Through a share placement, Gold developer Geopacific Resources has raised A$140 million to invest for the development of the Woodlark gold project in Papua New Guinea. The placement will be finished in two tranches. The first tranche consists of 43.7-million shares with a cost of 42c each for an initial A$18.4-million under the existing placement company of the firm. The second tranche of 289.6-million shares, to raise A$121.6-million is subject for the approval of the shareholder. Besides the capital raise, Geopacific also plans to have a share purchase plan (SPP) - also costing 42c each - which allows shareholders to subscribe for up to A$30,000 of new shares in the firm - to raise A$10-million.A meeting is scheduled for February 3. The SPP closes on February 10.“We are delighted with the strong support for the placement, welcoming a number of specialist Australian and international resource investment institutions to the register,” said chairperson Ian Clyne. “With the equity raising complete, the company intends to finalise the funding arrangement with Sprott Resource Lending, as a preferred project financier, with a view to commencing construction in the second quarter of 2021, and first gold expected in the fourth quarter of 2022.”This project is anticipated to produce 980,000 oz over its 13-year mine life and to have an internal rate return of 34% and a net present value of $347-million.

Mining

PNG Business News - December 11, 2020

Porgera Contractors Lose Estimated K111 Million

Local contractors in Porgera have lost an estimated K111 million since the mine shut down.This was disclosed by the Porgera Chamber of Commerce and Industry (PCCI) who according to its president, Nickson Pakea, said there were around 136 local contractors who provide servicing, support and heavy equipment parts.He added that businesses in the area have felt the sting of the lockdown, saying that the government needs to look at other ways to open the mine. “The mine shutdown has affected these businesses in a very big way and we are actually feeling the pinch,” he said. “We have 136 local contractors, that’s a composition of contractors supplying heavy equipment. We also have other micro-small to medium enterprises that benefit from the mine and local contractors apart from the national contractors. We have lost about K111 million over the last eight months. In Porgera, we only have mining which is our lifeline so when the mine shut down everything went down. We have been depending on the mine in terms of power, roads other basic services.”Pakea welcomed the idea that the government will open the mine next year but urged to open them sooner. He also asked them to look and find ways to work out the landowner issues. The chamber also acknowledged the assistance of the government of K10mil for the trucking industry.

Mining

PNG Business News - December 03, 2020

K92 Mining Shares Rise

K92 Mining has revealed that its shares have gone up.With results from the continuing diamond drilling of the Kora deposit at the Kainantu gold, the drilling results are highlighted by hole KMDD0261, which documented several high-grade intersections including 9.80 m at 83.27 g/t Au, 10 g/t Ag and 1.03% Cu (84.92 g/t AuEq, 6.63 m true width) at the K1 Vein.As for drilling to the south, the firm said in a statement that it has continued to intersect important mineralisation, highlighted by KMDD0229 which is recording several intersections that include 1.67 m at 29.76 g/t Au, 8 g/t Ag and 0.87% Cu (31.15 g/t AuEq, 1.11 m true width) at the K1 Vein.K92 CEO John Lewins in a media release said, “All twenty-eight holes intersected mineralization, with 18 intersections exceeding +10 g/t AuEq and 29 intersections exceeding +5g/t AuEq. We are pleased to announce the arrival of our tenth drill rig on site. Over the last twelve months, our drill rig fleet has doubled. We intend to continue to add drill rigs through 2021, with our eleventh drill rig scheduled to arrive in Q1. Drilling is underway at Kora, Karempe and Judd epithermal vein systems and the Blue Lake porphyry.”The Kora Deposit is composed of two parallel, steeply west-dipping, north-south striking quartz-sulphide vein systems, K1 and K2 - within an encompassing distant structural zone hosted by phyllite. The Kora Link, an additional structure, has also been defined between K1 and K2.The estimate of the present resource has an area of approximately 1,250 metres along strike by 1,050 to 1,150 metres vertically, representing ~75% of the drill target area.

Mining

PNG Business News - November 30, 2020

Investments in Exploration Decrease

Investments on exploration in the extractive sector, especially the mining industry, have decreased in the past decade.According to Chamber of Mines and Petroleum president Gerea Aopi during the outlining the significance of having policy statements in the budget at the Deloitte and Port Moresby Chamber of Commerce and Industry business budget breakfast, investments were reduced from a billion kina to just K200 million in 2020. He added that without such policies, the government will find it difficult to drive growth, especially at a time when investors are looking for assurance and confidence. “Without sensible policies on the resource sector, I think it’s going to be extremely difficult for the government to drive economic growth,” he said. “There has to be certainty also stability in terms of policies whether its fiscal policies, legal and what the investors really look at is certainty and we don’t want investors coming in not knowing what the rules are going to be.”Mr Aopi said that the policy statements offer no word on matters such as changes to legislation - whether that be the GasAct, the Mining Act, or in the Organic Law on resource ownership.“That creates a lot of uncertainty in terms of whether they are going to see capital developed into the economy,” he said. Exploration is the future for the industry resource sector because we need to replace our existing assets. Without having explorations this will not happen. Exploration can take up to 30 years before we see anything coming up. These are the investments we need to make. Because of the uncertainties makes it difficult.”Furthermore, Mr Aopi said that the fiscal stability agreement expected to be finished by the end of the year will offer some clarity to the fiscal terms agreed and signed last April 2019. He added that hopefully, this will help move Papua LNG forward towards progress. He said, “Industry does not object to the changes in policies as long as there is a dialogue and there is more consultation in terms of trying to point out what are the challenges and what can we do, we want growth and make a return for shareholders.”

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Mining

PNG Business News - November 25, 2020

Kingston Excited with Pre-Feasibility Study

Kingston managing director Andrew Corbett has been extremely excited with the results of the pre-feasibility study (PFS) which shows that Kingston Resources can revive the Misima gold mine back to life.Misima can come out with 130,000 ounces per year over a 17-year mine life. “This is a significant milestone for all stakeholders in the Misima gold project and represents a meaningful step towards our goal of becoming a substantial new mid-tier Asia Pacific gold producer,” he said. The company described the PSF as a project with “compelling” economics, “outstanding” growth potential and low capital intensity. The study also predicts gold can be produced at a cost of A$1,159 per ounce over the life of a mine as compared with its present Australian gold cost of around $2,560/oz.Misima now has a reserve of ore at 1.35 million ounces for a 10-year life on reserve ounces alone. In addition, there has also been a 12.5% increase in the global mineral resource from 3.2Moz to 3.6Moz. Capital costs are at $283 million - which involves the $37 million provision for contingencies, reflecting the advantages of operating on a brownfields site with important structures in place. With the lifting of the COVID restrictions, Kingston resumed drilling at Misima with two diamond rigs. The 8,000m project includes extensional and infill drilling at the southeast end of the proposed Umuna pit, and the company’s 2019 Abi discovery. Kingston also plans to leverage off a “strong production history” with modern infrastructure on the footprint of the historic mine and carbon in-leach treatment plant.Meanwhile, Mick Wilkes is poised to take over the role of the chairman at Kingston Resources. He has more than 35 years of experience in this industry and he has been successful in developing copper mines and major gold in the country globally.

Mining

PNG Business News - November 20, 2020

Government Signs Environmental Statement Approval

The government recently signed an environmental impact statement approval with regards to the K18 billion Wafi-Golpu project.This came after an agreement with the Morobe government to start moving forward. Prime Minister James Marape said the signing would grant the Special Mining Lease (SML) and negotiations for a mining development contract among the developer, state, and stakeholders. “We are moving this project and heeding the call of Morobe Governor Ginson Saonu and the people on the possibility of a tailings storage facility,” he said. “It is time for us to sit with every party and open dialogue again.”Marape said both governments would think of options which were economically viable and the best mine waste disposal measures. The Marape government will also have a 50-50 arrangement to sponsor feasibility studies on the issues from the Morobe government - which involves the bulk sampling of mine waste tailings. To figure out the presence of copper and gold minerals, mine waste testing will also be enacted. “The testing would be to see if there are any opportunity to make a business out of them and determine the type of terrestrial waste facility that is suitable,” he said. “Gold bullion discussions will grow bigger and the provincial government has put a proposal for a business opportunity in that space.”

Mining

PNG Business News - November 19, 2020

Ramu Project Awaits Issue Resolutions

According to the Mineral Resources Authority (MRA), the revised Ramu NiCo project memorandum of agreement (MOA) is still awaiting resolution of issues and challenges affecting landowners. Managing director Jerry Garry said that the MOA was signed in 2013 for a five-year period, which was due for review last 2019. He added that the review began in 2018 by sending notices to stakeholders, but no response was received. Garry remarked that the election of the landowner association executives was done in 2019. The decision of the court was in favour of the MRA and the election was finished last December 2019.“However, landowner association Basamuk, Inland and Kurumbukari (KBK), took the MRA to court and the proceedings took almost the entire year,” he said. “In 2020, the Basamuk and Inland Pipeline (landowner association) matters went before courts again, this time, on leadership. Given these challenges and issues affecting our landowners, the revised MoA review is still pending.” One of the biggest and most ambitious mining projects in the past decade, the Ramu nickel project cost US$2.1 billion (K4.08bil). Its construction was finished in 2021 and the plant had been brought into production. The Kurumbukari nickel and cobalt laterite mine are linked by a 135km pipeline in the Kurumbukari plateau to the Basamuk processing plant east of Madang town, along the Rai Coast of the Vitiaz Basin.The Basamuk processing plant and Ramu mine are a joint endeavour between the Highlands (8.56 per cent), landowners and the government and Metallurgical Corporation of China (MCC) Ramu NiCo Ltd (85 per cent).

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