The momentum is being maintained

A recent seminar in Port Moresby heard about the importance of the mining industry to Papua New Guinea and the boom times to come. By Magnus Ericsson
The momentum is being maintained The momentum is being maintained The momentum is being maintained The momentum is being maintained The momentum is being maintained

Published in the February 2012 PNG Report magazine

There could be few more telling images of the momentum now behind mineral exploration and development in Papua New Guinea than the sight of the 650 delegates who attended the Mining Sector - Building a Nation seminar at the end of November last year. Held in Port Moresby and organised by the PNG Chamber of Mines and Petroleum (CMP), the meeting included presentations from 30 of the companies that are currently active in the country.

Keynote speeches from the country's prime minister and the minister for mining, and from the CMP president, set the tone for the meeting.

"Papua New Guinea's mining and petroleum sector has been the most aggressive driver of our nation's good economic fortunes for almost a decade," Prime Minister Peter O'Neill said.

"Our government acknowledges the sector's contribution to stabilising and growing our economy since the economic meltdown of the 1990s.

"There is no immediate desire on the part of government to review existing mining and petroleum legislative and fiscal frameworks ... let me reassure you that our government is committed to fast-tracking and facilitating processes that will enable start-up of new ventures awaiting regulatory clearance and licence approvals."

Before updating delegates on the revision process for the country's mining legislation, Mining Minister Byron Chan provided some information on the current position regarding mining and exploration licences. "According to the recent updated mapping data produced by the Mineral Resources Authority," Chan said, "to date over 80 per cent of the PNG landmass is taken up by mining and exploration licences. This was a result of launching the geophysical and geochemical survey datasets during 2010."

And the benefits are quickly feeding through into the wider community, according to CMP president Ila Temu.

Between 2005 and 2010, royalty payments from the mining industry totalled nearly 820 million kina ($US385 million), with the amount growing each year, he said, adding that direct employment in the mining and petroleum industries had grown to over 30,000.Exploration gives other job opportunities to village communities, he said, with growing demand for the whole range of logistic and technical input supporting a thriving service sector.


With so much activity on exploration projects throughout PNG over the past three or four years, it is hardly surprising that an increasing number have now reached feasibility study stage. Add to that the continued strength in commodity markets and companies are making sure that study parameters reflect current, rather than overly conservative, market conditions.

As an example, in November 2011, Xstrata Copper and Highlands Pacific announced a delay in the completion of the feasibility study on their Frieda River project to give them time to access alternative power supply options.

In December, the PNG government was reported to have given the go-ahead for a natural gas-fired power plant that could supply both Frieda River and the existing Ok Tedi mine, thereby providing a lower-cost and quicker alternative to developing a new hydro-electric power source.

The delay means that the study is now scheduled for presentation at the end of 2012, building on the companies' October 2010 prefeasibility report, which indicated the viability of a 20-year open-pit operation producing 190,000 tonnes per annum of copper and 280,000 ounces per annum of gold.

Also in the Western Highlands, Ok Tedi Mining submitted a feasibility study to the MRA on its mine-life extension plan in the middle of last year, and is now in the process of updating this.

Meanwhile, the Morobe Mining joint venture between Harmony Gold Mining and Newcrest Mining has a prefeasibility study on Wafi-Golpu scheduled for completion in mid-year, with early designs outlining a large-scale block-caving operation. Resources at Wafi-Golpu are now estimated at over 1,000Mt containing 9Mt of copper and 26.6Moz of gold.

And at Yandera, Marengo Mining is finalising its feasibility study for the copper-molybdenum-gold porphyry project with technical support from China Nonferrous, and the PNG state company, Petromin, having agreed to take a 30% investment stake there.


In late 2011, Frontier Resources and Ok Tedi Mining began drilling on their joint-venture gold project at Bulago in the Highlands, and at Esis, part of Frontier's Likuruanga gold-copper project in east New Britain Island. Drilling at a third prospect where Ok Tedi Mining is earning a holding, the Leonard Schultz project in West Sepik province, was also scheduled.

Meanwhile, in January Barrick Gold completed its $US20 million expenditure commitment to earn a 72% interest in Coppermoly's Simuku, Nakru and Talelumas copper-gold prospects on New Britain. The two companies have now formed a joint venture to continue evaluation of these properties.

Current estimates suggest Simuku has a 200Mt inferred resource containing some 700,000t of copper. Coppermoly recently reported that drilling had identified over 1000m depth of copper mineralisation there, while a hole at the Misili prospect returned nearly 400m of copper mineralisation, plus showings of molybdenum and silver.

In July 2011, Goldminex Resources began a farm-in agreement with Brazil's Vale, through which Vale can earn a 51% stake in six prospects under a $US20 million, four-year exploration commitment. The initial focus for the joint venture is on Goldminex's Liamu and Ubei porphyry copper-gold prospects in the Owen Stanley Ranges, with drilling on specific targets at Liamu scheduled to run through into 2012.

Goldminex is also continuing with its own nickel exploration in the area and is looking for funding support for work on its Awari and Karawai gold prospects in the Sepik highlands.

And it's not just the majors that are successfully earning-in on good prospects. Papuan Precious Metals reports that it has now completed its commitments to obtain a 50% holding in Petromin's Waria River licence area in the Owen Stanley Ranges, with recent sampling having identified copper, gold and silver potential there.


One of the aspects of major mineral exploration regions that is often overlooked is the provision of transport and logistics infrastructure.

It is well-recorded how, in the 1930s, the Bulolo goldfields were supplied largely by air, an achievement that was commemorated on New Guinea's 1935 airmail stamps.

While a lack of demand led to the airport at Bulolo being closed during the 1990s, the more recent upsurge in exploration and mining activity resulted in its being re-commissioned in 2009.

And it's not only airports in PNG that have benefited from the minerals exploration boom. The number of flights from Cairns and Brisbane has increased significantly over the past two years, according to Queensland government figures released in late 2011, with some 50 flights a week now scheduled to Port Moresby and other centres in PNG.


While there is clearly a strong focus on finding out more about Papua's mineral wealth, the islands that make up the rest of PNG are also receiving extensive exploration coverage.

The endowment already evident through successful mines such as Lihir, Misima and Simberi has provided the spur for a succession of companies to explore, and in some cases to revisit, prospects throughout New Britain, New Ireland, the Tabar Islands and beyond.

On Woodlark Island, for instance, Kula Gold has a gold resource estimated at 685,000oz that is forming the basis for a feasibility study this year. Recent step-out drilling from the company's established Kulumadau West resource has indicated additional potential, Kula has reported.

Fergusson Island is also receiving exploration attention, with Vangold Resources targeting a number of prospects in two separate areas of the island, while Gold Anomaly is currently updating a 2004 prefeasibility study on the Gameta and Wapolu deposits on the island's north coast.

Elsewhere in the d'Entrecasteaux Group, PNG Gold spent 2011 continuing its evaluation at Imwauna and Sehulea on Normanby Island, with an option to acquire New Guinea Gold's 50% stake in the properties and a prefeasibility study scheduled for completion in May.


While it is too early in the year for most companies to have released their 2011 production figures, some of the results reported for the September quarter show just how strong PNG's mining industry is becoming.

Ok Tedi Mining reported the output of some 37,800t of copper concentrates and 105,500oz of gold for the quarter, while Barrick Gold's Porgera mine produced 129,000oz of gold.

At Hidden Valley, Morobe Mining produced 43,000oz of gold during the three-month period, with Newcrest Mining's Lihir mine adding a further 208,000oz to its already huge lifetime total.

Amongst the smaller producers, Allied Gold produced 16,000oz from its mine on Simberi Island, while New Guinea Gold's Sinivit mine on New Britain contributed a further 1700oz to the country's quarterly total.

From PNG's standpoint, expanded mineral production is a major driving force for economic development, with the value of mineral exports accounting for around 80% of the country's foreign earnings and underpinning GDP growth.

Before long, these mines will be joined by others. Ramu (nickel-cobalt) is scheduled for full capacity in 2014, while Nautilus Minerals is planning to commission its Solwara 1 seafloor mining operation in 2013. And, with so many projects now at late-stage evaluation, there will doubtless be more to add to the list.

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