Papua New Guinea (PNG) is experiencing a significant resurgence of major mine developments, despite being voted amongst the world’s most unattractive mining jurisdictions in a recent survey.
Known for many years as the home of giant-sized gold and copper mines in particular, PNG’s mining sector and economy has taken a recent hit due to the effects of COVID and political concerns.
But in recent months, significant moves have been made that are reviving hopes that delayed developments will re-commence.
Wafi-Golpu
One of the world’s largest undeveloped copper-gold mines – Wafi-Golpu – is on track to commercialization following the signing of a framework Memorandum of Understanding (MOU) between mining giants Newcrest Mining Limited (ASX: NCM), Harmony Gold (NYSE: HMY), and the Papua New Guinea government.
Newcrest and Harmony Gold mining company each currently own 50% of the Wafi-Golpu copper-gold project through the Wafi-Golpu Joint Venture (WGJV).
Initially discovered in the 1970s, the development of the Wafi-Golpu project in PNG’s mountainous Lae province has been delayed for many years due to political concerns and more recently, COVID.
Newcrest interim CEO, Sherry Duhe, said all parties now believe the new MOU represents a substantial step forward in progressing towards the signing of a mining development contract for Wafi-Golpu, and confirms the parties’ intent to proceed with the project.
“This MOU is a pivotal milestone towards the development of one of the world’s premier undeveloped copper-gold deposits. Importantly, the project will result in fair and equitable benefits for landowners, communities, local level governments, the Morobe Provincial Government and the independent state of Papua New Guinea, while also delivering strong returns for the developers,”
“The commitment of Prime Minister Marape, his government and the Morobe Provincial Governor to this MOU gives us the confidence that permitting will progress constructively and in a timely manner to the grant of an SML to the WGJV. We will then move swiftly to update the 2018 feasibility study and commence engineering towards development.” Ms Duhe said.
Porgera
In late March, the PNG government, Barrick Niugini Limited and New Progera Limited signed an agreement to progress with the resumption of operations at the giant Porgera gold mine, which have been suspended since 2020.
Porgera hosts an orebody with measured and indicated resources of 10Moz and inferred resources of 3.4Moz. After initial ramp up and optimisation of the Wangima pit, the mine is forecast to produce an average of 700,000oz/year, achieving a milestone towards its potential tier one status.
The New Porgera Progress Agreement (NPPA) confirms 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 concluded in 2022. The New Porgera project team will now move ahead with the filings for a special mining lease and progressing the other conditions set out in the commencement agreement for the reopening of the mine.
The equity in New Porgera is shared 51% by 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, who will operate the mine.
After the signing ceremony, Barrick president and CEO Mark Bristow said there was strong support from all stakeholders to get Porgera reopened as soon as possible.
“It’s been a long journey but in the process, we have secured the buy-in of all the stakeholders. For Barrick, the reopening of the mine would represent another victory for our host-country partnership model which has been so successful in Tanzania and has now also been adopted for the new Reko Diq copper-gold project in Pakistan,” Bristow said.
“Localization is an essential part of our partnership philosophy so New Porgera will, whenever possible, source the goods and services it requires from businesses genuinely based and owned in Porgera, the Enga province in PNG. Similarly, it will give preference to locals in recruiting employees for the reopening mine.”
Lihir
Earlier this year Newcrest confirmed its approval for the world class Lihir Gold Mine’s phase 14A feasibility study, endorsing the project into full implementation.
As part of the study, site investigation and trial works have been completed, and a robust plan has been developed which extends the Phase 14 cutback and safely steepens the walls of the pit utilizing civil engineering techniques. Completion of a drilling programme has significantly improved the geotechnical knowledge of the cutback area and enabled refinement of the anchor design and placement to better suit the geotechnical conditions.
“The development of Phase 14A is another innovative step forward in realizing the full potential of Lihir. The findings of the study are expected to deliver gold production from an additional high-grade ore source which would have otherwise been inaccessible through standard mining techniques,” Newcrest interim CEO, Sherry Duhe, said.
“The study outlines an updated life of mine plan, with upside potential. The application of steep wall technologies, together with an alternative, lower cost and simpler seepage barrier design, have the potential to enable access to additional high-grade zones outside the current ore reserve and extend the elevated production profile beyond FY31.”
“Our team continues to work diligently to maintain a strong focus on capital discipline, placing several recovery improvement capital projects on hold that currently do not meet our investment criteria. The Phase 14A ore zone is now well informed by geotechnical drilling that underpins the design and stability of the cutback, and we expect Phase 14A to be delivering higher-grade ore from FY24.” said Ms Duhe.
Ok Tedi
The giant Ok Tedi copper-gold mine (OTML) will generate over PGK$19B (approximately US$5.3B) in dividends for the benefit of Papua New Guinea over the next 11 years, according to OTML general manager commercial and CFO, Cameron Clark.
Mr Clark said that although the mine has been impacted by high fuel cost, and the expected low-grade ore transition in 2022, OTML remains profitable and is committed to delivering for its shareholders.
“The outlook for Ok Tedi is a positive one. The company has tripled its value in the last six years and extended mine life by seven years. This has been made possible by a combination of technical improvements, cost improvements, accelerated mining rates, and internal investment in key strategic projects.” Mr. Clark said.
He put this amount into context by saying dividends over the next 11 years will exceed what has been paid in the last 35 years making the period ahead a very important one.
