In the hands of bureaucrats

PNG Gold Corporation has conditionally agreed to acquire struggling New Guinea Gold and for the deal to go ahead, the mining and exploration licences for the small Sinivit gold mine in East New Britain must be renewed by May 31.
In the hands of bureaucrats In the hands of bureaucrats In the hands of bureaucrats In the hands of bureaucrats In the hands of bureaucrats

NGG recently revealed it would close Sinivit and there was no guarantee PNG Gold's scrip-based takeover offer made in November would be finalised "in time" or "at all".

PNG Gold has since made $C2.5 million available to NGG as a loan at 8% interest to overcome the "critical and immediate cash shortfall" facing the Sinivit mine owner.

A binding deal to complete the acquisition has also been struck but there are two important conditions which must be reached by the end of May.

PNG Gold said the Sinivit licences ML 122, ME 70 and EL 1140 must be renewed for two years.

The second condition was for a memorandum of understanding agreement struck by NGG to provide compensation to local landowners - which must be acceptable to government authorities and to PNG Gold.

Thus, the fate of the deal is partly outside the realm of NGG altogether.

Delays with mining-associated licence renewals are not uncommon in PNG, although there are typically more delays in the petroleum arena.

At the end of February, NGG revealed the Sinivit mine had lost two months of production even though the site occupation by landowners only took place over one week during the Christmas and New Year festive season.

The aggrieved landowners were upset over outstanding royalty payments at the time and NGG worked with PNG's Mineral Resources Authority to resolve them.

Mining at Sinivit is expected to cease during this quarter while leaching operations will wind down over the "following months".

With the mine and equipment going on care and maintenance, NGG is still continuing a definitive feasibility study on possibly extending the operation.

The study will assess the economic viability of the partially crushed and leached ore onsite along with untouched, "high-gold, high-copper" ore in the ground, plus will consider the extraction of tellurium.

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