The company said it made the decision at 11am Wednesday after members of the Barola Kafe Clan, who last month threatened to close the mine, made new and more serious threats.

Police are now investigating the threats, and government officials are also said to be discussing the issue with members of the clan, in a bid to resolve the conflict.

Highlands Pacific managing director Ian Holzberger told PNGIndustryNews.net the mine’s 430 workers, the vast majority of whom are PNG nationals, were now stationed in a nearby mine camp.

He said there was now a “significant number” of police officers from the PNG mobile squad on site and added that those involved in the threats were not occupying any area of the mine site.

“Basically it was a judgement call by us. There were threats to personnel and property that we judged to be serious and we took the decision to close the operation down in the interest of our employees, contractors, the local community and also to protect the assets of the project,” he said.

Holzberger explained the security threat was the result of frustrations over the Land Title Commission review process, which has yet to be completed. The original hearing was due to take place in May 2004 but was delayed after a lack of government funding.

“The Lands Title Commission has not moved to completion because of various funding issues by the government. These people have seen fit to take some pre-emptive action of their own,” he said.

“Once again the company has found itself being the meat in the sandwich, which is something that clearly we are not very pleased about.”

The delay in the review process is reportedly due to the Department of Treasury and Finance withholding K1.18 million (A$470,000) in funds set aside for the review.

“The government has to adequately fund the Lands Title Commission and the Lands Title Commission has to go to completion and these claimant groups have to agree to participate in that process,” Holzberger said.

“I don’t have sufficient knowledge to know exactly why the funds have not been made available to the Lands Title Commission but from our perspective, the funding has not been available for the people to do the work.

“Whatever the reason for that, it is just not an acceptable position.”

Holzberger said over the past 24 hours, the company had been contact with PNG government officials on “numerous” occasions and he was now hopeful the conflict would be resolved “promptly”.

Highlands’ $US58 million ($A79 million) Kainantu gold mine, commissioned in January, has been flagged to produce around 115,000 ounces of gold per annum with a mine life of at least 10 years, shipping about 21,500 tonnes of gold concentrate averaging 180 grams per tonne annually.

First concentrate from the mine was shipped to Japan in February.

Last month, Chief Lands Title Commissioner Josepha Kiris told a press conference in Port Moresby that she had contacted the department and was given a “vague” answer as to why the funds had not been released.

“If the Government is allowing new (major) resource projects to operate in the country, it should be prepared to fund the land dispute hearings. But now it seems the Government is not serious.”

Kiris said a tentative date for the hearing was set for this month.

The Lands Title Commission hearing for the giant Ramu nickel-cobalt project, in which Highlands also holds a stake, is also yet to be completed.