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Diversification – the Search for new Minerals in Papua New Guinea

Philip Samar Acting Managing Director Mineral Resources Authority. Diversification – the Search for new Minerals in Papua New Guinea . Cairns Mining Conference June 12, 2013. Introduction. Mineral dependant economy (60% total export receipts 2010).

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Diversification – the Search for new Minerals in Papua New Guinea

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  1. Philip Samar Acting Managing Director Mineral Resources Authority Diversification – the Search for new Minerals in Papua New Guinea Cairns Mining Conference June 12, 2013

  2. Introduction • Mineral dependant economy (60% total export receipts 2010). • Average annual production - 60 tonnes Au, 70 tonnes Ag, 180,000 tonnes Cu. • Contribution from 3x large mines, 2x medium mines, 2x small mines and 100,000 artisanal miners. • 5 Year portfolio - 4x large mines to commence production. Gold output ~80 tonnes by 2016. • Diversification of mineral base (Co, Ni, Mo, Coal). • US$15 billion LNG Gas investments (Exxon Mobil, Interoil) • Government owned and operated mines (Tolukuma, Oktedi)

  3. Operating Mines • Porgera (Barrick Gold) • Kainantu – on C&M (Barrick Gold) • Ok Tedi (PNG Govt) • Tolukuma (PNG Govt) • Sinivit (New Guinea Gold) • Lihir (Newcrest) • Simberi (St Barbara) • Hidden Valley (Harmony/Newcrest JV) • Ramu – MCC (Chinese Government) • The Ramu Ni/Co mine commenced commissioning operations in January 2012 and is the latest addition.

  4. 2012 Actual Production

  5. Mines under Application • Kula Gold have submitted their FS and Application for a Mining Lease to the MRA and currently being assessed. • Mine Life – 9 years • Capital Cost ~ US$150 million

  6. Five Year Portfolio – World class projects

  7. 1. Mt Kare • Owned and Operated by Indochine • 1 Moz gold potential and 8Moz silver • Currently undergoing Feasibility Study for completion Dec 2013. LIS is key. • Projected mine life of 8 years • Commercial Production – 2016 • Annual Production: Au – 120,000 ozs, Ag - 1 Mozs

  8. 2. Yandera • Marengo Mining Ltd is the developer of the Yandera project located in Madang Province • Current reserves of 500Mt • Bankable Feasibility Study to be completed in 2013 • Mine life expected to be 20 plus years • Producing Copper and Molybdenum • Production expected in 2017

  9. 3. Frieda Copper • Glencore is the new owner of the project located at the border of Sandaun and East Sepik Provinces • current reserve of 7.5 million ounces of gold and 14.3 million tonnes of copper and collectively forms one of the world’s largest undeveloped copper and gold deposits. • Definitive Feasibility Study to be completed in 2013 with mine life of 20 plus years. • Production anticipated in 2019

  10. 4. Wafi-Golpu • The Wafi-Golpu exploration project is a joint venture (50-50 percent stake) between Harmony Gold of South Africa and Newcrest of Australia. • The Wafi-Golpu project has current resource estimate of 9 million tonnes of copper and 26.6 million ounces of gold with Gold equivalent of 74million ounces and forms one of the world’s major gold deposits. Current indications are that this project has the potential to be another Ok Tedi or Panguna sized operation with an expected Mine life of 20 plus years • Pre-Feasibility Study competed and presented to government

  11. Wafi-Golpu cont’d • Feasibility Studies to commence in the third quarter of 2013 and delivered in 2014 and production expected in 2019. • The PFS proposes that the Golpu deposit be mined via a large, long life, deep underground mine using the block caving method, first in PNG for such operation. • Community Participation Agreement (CPA)program rolled out involving the 16 communities of WafiGolpu. About 80% complete. • Government allocation of K1.5million as Business Development Grant to be utilized for CPA

  12. Focus on Diversification • PNG has traditionally been a Gold, Copper & Silver producer. • Strong focus now on diversification into : - Nickel & Cobalt (Ramu mine) - Chromite/Iron (Beach Sands FS) - Molybdenum (Yandera project) - Industrial Minerals - Coal (new EL applications) - Rare Earths (PPP option)

  13. Offshore COAL Iron Sands Rare Earths COAL Nickel/Cobalt Iron Sands

  14. Institutional Reforms • Review of Fiscal Regime for mining exploration & development in 2001. • Set up of Mineral Resources Authority (MRA) to better regulate, administer and promote PNG’s mining industry. • Set up of Dept of Mineral Policy to develop government policies on mining industry. • EU Sysmin TA – Improved Geological mapping • World Bank TA – institutional strengthening. • Recruitment of specialist skills sets

  15. Porgera mine Preliminary Results – Area 1

  16. Proposed Legislative & Policy Reforms • ONLINE TENEMENT APPLICATIONS AND APPROVALS PROCESSING. • INCREASE TENURE OF EXPLORATION LICENCES FOR A 3 YEAR TERM OR UP TO A 5 YEAR TERM DEPENDING ON THE NATURE OF EXPLORATION AND CIRCUMSTANCES SURROUNDING EACH APPLICATION. • MERGING OF THE SPECIAL MINING LEASE (SML) AND A MINING LEASE (ML) TO FORM A SINGLE MINING LEASE WITH THE DISTINCTIONS CAPTURED THROUGH THE MINING DEVELOPMENT CONTRACTS. • MINING RETENTION LICENCE TO ENABLE DEVELOPERS TO APPLY FOR LAND THAT IS NECESSARY FOR RETENTION FOR THEIR SPECIFIC PURPOSES. • FAST TRACKING THE APPROVALS PROCESS FOR TENEMENT APPLICATIONS WITH SPECIFIED TIME FRAMES TO BE INTERNATIONALLY COMPETITIVE AND ATTRACTIVE. • STATE EQUITY PARTICIPATION - TO REALIGN THE GOVERNMENT NOMINATION OF PETROMIN AS THE STATE’S NOMINEE TO TAKE UP TO 30% STAKE IN ANY MINING DEVELOPMENT PROJECT IN PNG.

  17. Other Sectoral Developments… • LNG Gas development (US$10 billion) • Geothermal mapping and analysis - Alternative Energy sources to power mining operations. • Transport & Infrastructure – Govt plan to upgrade facilities.

  18. Challenges… • Sustainable outcomes from mine derived benefits for stakeholder (State/Landowners/Company). • Better management of social issues that affect mine operations. • Provision of essential social services. • Ensuring more clarity and transparency in existing & proposed mining policies (current review of legislation & policies).

  19. www.mra.gov.pg

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