Papua New Guinea Prime Minister Peter O’Neill this week reaffirmed his government’s commitment to supporting the mining industry.

In his first visit to the Hidden Valley gold mine and Wafi-Golpu project in Morobe, O’Neill said it was very important to have good strong partnerships in place to become successful, especially in the mining industry.

O’Neill, along with his entourage comprising mining minister Byron Chan and high level officials, toured Hidden Valley in the first leg.

Accompanying them were Harmony Gold Mining chairman Patrice Motsepe, chief executive Graham Briggs and executives, provincial government officials and landowners.

Some of the highlights pointed out by Hidden Valley’s general manager Bevan Jones included the tailings storage facility, a first of its kind in PNG, where any tailings or waste from the processing plant were stored in the facility and not released in the environment.

O’Neill was then shown the 4.5km overland conveyor (OLC), the longest in the world that transported ore bodies from the crusher to the mill.

He was also shown environment monitoring mechanisms set in place to monitor the mine’s environmental footprint , including water quality monitoring along the river systems, and sediment reduction improvement programmes.

“Getting briefs is one thing but coming to see what you are doing is very encouraging,” O’Neill said.

“To see a joint venture working closely with the landowners and people is an example of what can be achieved if all partners are working to make a project like this a success.”

O’Neill said the government would continue to support Hidden Valley and the upcoming Wafi-Golpu project by giving its full attention to supporting infrastructure and projects in the Bulolo district such as the Lae to Bulolo-Wau highway.

Motsepe said that Harmony was confident of building a partnership with landowners, stakeholders and the government.

 “Our success, the success of Harmony and its partner (Newcrest), depends on the success of the local people and the success of the government as a whole,” he said.

After Hidden Valley, O’Neill visited the Wafi-Golpu project, where he was shown around the camp and drill locations.

He was given a brief presentation on the ore reserves of Wafi and Golpu developments and a rundown on how the projects were being planned out until production.

O’Neill also visited the Wafi-Golpu health clinic, run by the Wafi-Golpu project nursing staff and two government aid post orderlies.

“I’m very pleased to see this sub-health centre providing medical services to the people,” he said.

“This is what we want to see throughout PNG, strong partnerships with the local people.”

O’Neill told a small number of village people who came to see him that Wafi-Golpu was a big project and would take a while to develop.

He appealed to them to work together with the government and the mining venture to ensure benefits reached every stakeholder.

Radio NZ

Papua New Guinea’s Prime Minister says the potential benefits for the country from the Wafi-Golpu gold and copper resource are huge.

Peter O’Neill was speaking ahead of today’s visit to Morobe province deposit accompanied by the chairman of the Wafi-Golpu Project co-developer Harmony Gold, Patrice Motsepe.

In recent days, South Africa-based Harmony, along with its joint venture partner Newcrest Mining, announced the deposit could support a mine worth 9.8 billion US dollars.

PNG’s government has an option to take up to a 30% stake in the mine.

The newspaper, The National, reports Mr O’Neill saying work underway on the Lae sea port and his government’s plan to upgrade key roads that link the project to the port will greatly enhance production.

In his meeting with Mr Motsepe, the Prime Minister is expected to discuss PNG’s fiscal and regulatory regime, and the involvement of provincial government and landowners in resource projects.

Harmony Gold Mining has outlined the potential of the Wafi-Golpu project, a 50-50 JV with Australia’s Newcrest Mining in Papua New Guinea, saying in a presentation the deposit could support a $9.8 billion mine with peak annual production of 560,000 gold ounces and 335,000 tonnes of copper.

The mine with a 26-year mine life will cost $4.85 billion to bring to production with annual output at 490,000 ounces of gold and 290,000 tonnes of copper with start-up in 2019 followed by expansion.

The economics of the mainly underground mine located 80 km from the port of Lae is sweet – gold output will cost a negative $2,600 an ounce while copper would be extracted for just $0.54 a pound. Copper was trading at $3.76 in New York on Friday.

The market has been anticipating great things from  Wafi-Golpu. Harmony’s 2007 pre-feasibility study showed a 1.3 million oz gold and below 1 million tonnes of copper. This has now grown to contain roughly 12.4 million ounces of gold and 5.4 million tonnes of copper.

Harmony Gold says the site is highly prospective and will embark on a feasibility study next year with a focus on enhancing gold recovery which is pegged at 61% at the moment and a $400 million drilling program.  Discussions with local landowners are also ongoing.

Harmony Gold’s Australian partners Newcrest’s Lihir gold mine in Papua New Guinea has run into trouble with landowners over compensation and the 600,000 gold oz per year mine had to be briefly shut in August.

The government of PNG has the option to take a 30% stake in the Wafi-Golpu mine at cost.

Mining Minister Byron Chan told Nakuwi landowners of the Hidden Valley gold mine and Morobe Provincial Government leaders that the mining laws of Papua New Guinea will be changed.

Mr Chan said the law would be changed to reflect the land ownership rights of Papua New Guineans so that they did not miss out on benefits derived from such projects in their areas.

However, he qualified his statement by saying that the changes in the law would not take place tomorrow but over a period of time and would reflect the economy of the world and the country.

Mr Chan and Harmony Gold executives Johannes van Heerden, chief executive officer for South East Asia based in Australia; Mashego Mashego, executive director of Harmony Gold, South Africa; and Jaco Bosholf, executive of Harmony Gold South Africa, who were in Winima village on Monday to witness the hand over of Benefit Sharing Agreement and Special Support Grant projects.

They were put to task by Nakuwi landowner group chairman Rex Mauri and Morobe’s Deputy Governor Morokoi Gaiwata on behalf of the landowners.

The Minister said the law would be changed over time and would reflect the needs of the landowners but would also take into consideration the prevailing conditions of the world economy and especially the status of the Asia Pacific economy.
Mr Chan said this would ensure that the developers of oil, gas and mineral projects were not disadvantaged.

Mr Mauri asked Mr Chan, the State of PNG and the developers for an increase in their royalties from two percent to five percent so that the landowners could meaningfully participate in the project and spinoff business activities.

He also asked for the mining lease at Hidden Valley to be changed to Special Mining Lease (SML) which had broader benefits for landowners.

Mr Gaiwata asked for amendments to be made to the relevant laws regarding landowners only owning what was on top of the soil and down to six feet and not anywhere else under the land or sea.

He asked Mr Chan to change the law so that landowners could own everything from the top of the soil right down and across to where the ore body ended.

Mr Mauri also asked Mr Chan to inform all mining companies to respect landowners and ensure that they did not unnecessarily miss out on opportunities that would have positive impact in their lives and that of their children.

Mashego Mashego, a black South African and the Executive Director of Harmony Gold in South Africa, who flew all the way from there to witness the BSA and SSG projects, said Harmony Gold had a social obligation to ensure that landowners in places they did business in did benefit from the project.

Mr Mashego said from the boardroom in South Africa, they were constantly asking whether they were making a difference in the lives of landowners where they did business and he came to Winima at Wau, Bulolo District in Morobe Province to see firsthand if benefits were flowing to the landowners.

“We are here to understand the dynamics and not only understand it but to deliver,” he said.

He said MMJV was here to stay in Morobe Province and they were committed.

The Fiji Times (21/9/12) confirmed

“Namosi Joint Venture (NJV) has welcomed government’s endorsement to resume exploration, studies and the Waisoi Project Environment Impact Assessment. NJV country manager Greg Morris thanked Prime Minister Commodore Voreqe Bainimarama and State officials for their role in helping to resolve areas of community concern and finding a co-operative way forward.

Government gave the green light to the Namosi Joint Venture (NJV) to recommence all activities relating to special Prospecting Licence (SPL1420) including exploration, project studies and Waisoi Project Environmental Impact Assessment (EIA) until 2015”.

Now there is a serious disagreement over this very serious green-light. Why?

On the one hand, we have the PM heralding his intent that the people are to be heard and that if there is any transgression to agreements that these should be cleaned up i.e. rehabilitating the degraded environment during the suspended SPL1420. More importantly, Bainimarama maintained that at the end of the rehabilitation the landowners would be consulted on the way forward for SPL1420. And all was quiet as the rehabilitation work was carried out with the TNLC taking on a monitoring role to ensure that this was done with the knowledge that they would sit and discuss the way forward as major stakeholders.

Now, with the end of the rehabilitation TNLC prepared for their meeting with the PM when something explosive took place. The decision to go ahead with SPL1420 and the EIA was made.

By the Prime Minister.

Without consulting the TNLC as he had promised them in January 2012.

This after TNLC had presented their survey findings that 92% of the people of Namosi and Naitavuni DO NOT WANT SPL1420 TO GO AHEAD.

In fact the people of Namosi have been told in no uncertain terms that the mine will go ahead no matter what the landowners say – and to be clear they have said ‘NO’ and they said this very consistently and loudly.

It is common knowledge that TNLC sent 2 of their representative to our neighbor PNG to take a look around a few mine sites and talk with the landowners. Report back from the 2 who visited Porgera and OK Tedi, talking with the landowners is this – ‘no, no, no to mining or any sort or form. There is no such thing as ‘sustainable mining’” affirming what Namosi and Naitavuni already know and told the PM earlier this year.

This latest update from the landowners reveals a serious and frightening situation for Fiji – when the Prime Minister deliberately disregards the voice of the landowners in favor of the Company and presents it to the world an agreement.

What will happen now when the Government backs a Company for profit? What happens to the people?

The trouble-plagued Lihir goldmine in Papua New Guinea continues to drag on Newcrest Mining, which yesterday lowered its production forecast for the September quarter, limiting any chance it could hit the upper range of its year target.

Newcrest shares fell 2.9 per cent to close at $28.92 yesterday after an electrical fault reduced the mine to 25 per cent of its output. It would take 10 days to resume full production, Newcrest estimated.

Morningstar analyst Mathew Hodge said Lihir had been ”a troublesome place ever since it started”.

”It’s a very expensive place to do business,” he said. ”It’s inside a volcano, and the ore is very difficult to treat – it’s not liberated easily. ”It’s a bit like [Anaconda's failed] Murrin Murrin [nickel mine], requiring high pressures and high temperatures, which brings additional maintenance costs.”

Mr Hodge said Newcrest had ”obviously found more issues than they expected when they made the takeover” of Lihir Gold for $10.6 billion in 2010.

Newcrest said gold production for the September quarter was expected to be about 460,000 ounces.

Deutsche Bank’s Brett McKay calculated this new target was 40,000 ounces lower than should be expected after factoring in 15,000 ounces lost at Lihir due to yesterday’s electrical fault, the 10,000 ounces lost when a conveyor broke down at the Ridgeway mine in NSW, and another 5000-ounce reduction from another Lihir shutdown in August. Newcrest maintained that despite the lower September quarter output Lihir would hit its target for the year of 700,000 to 900,000 ounces.

Newcrest Mining Ltd , Australia’s largest gold miner by output, said Friday that production at its Lihir operation in Papua New Guinea has been temporarily reduced to about 25% of capacity following a problem with its electrical system.

The miner said it expects the plant to return to full capacity within 10 days and that the issue won’t affect its full year output targets.

“Newcrest’s maintenance team and the equipment manufacturer are addressing the issue and are working to have the plant ready for restart in the coming few days,” the company said in a statement.

The miner expects to produce between 2.3 million troy ounces and 2.5 million ounces of gold this financial year, of which 700,000 ounces to 900,000 ounces will come from its Lihir operation.

The miners looking to setting up a mine in Namosi have welcomed Prime Minister Commodore Voreqe Bainimarama’s endorsement of the resumption of special prospecting licence  for their proposed billion-dollar copper and gold mine.
The endorsement will mean the Namosi Joint Venture (NJV) can resume exploration works, project studies and the Waisoi Project environment impact assessment until 2015.

Namosi Joint Venture country manager, Greg Morris, thanked the Prime Minister and Government officials for their leadership in helping resolve areas of community concern and finding a co-operative way forward.

The Prime Minister earlier this year had to step in and stop Namosi Joint Venture’s exploration work following environmental concerns raised by landowners.

He had than approved the rehabilitation action plan for the site.

Mr Morris said: “We are also very appreciative of the participation and support from the Tikina Namosi Landowners Committee (TNLC) in the process leading to the successful implementation of the Namosi Rehabilitation Action Plan.

“Through this co-operation, we have developed a better understanding of each other and how to communicate and work together more effectively.”

Mr Morris has assured they will build on the strong relationships developed during this process and move forward within the framework jointly agreed by the Namosi Joint Venture, Government and the TNLC on behalf of landowners.

He further indicated Namosi Joint Venture’s commitment to working closely with the local community and other stakeholders.

He said Namosi Joint Venture was pleased the Waisoi Project environmental impact assessment studies could resume.

“This is because the environmental impact assessment findings will be a critical step,” he said.

“It will help the community, Government and the NJV consider whether a mine at Waisoi can be built safely, economically and in an environmentally and socially-acceptable manner.”

The Namosi Joint Venture is a group of three companies who have come together to explore for and potentially mine mineral resources in Namosi and Naitasiri Provinces.

The joint venture includes Newcrest (Fiji) Ltd (70 per cent), Materials Investments (Fiji) Ltd (28 per cent) and Nittetsu Mining Co. Ltd (2 per cent). Newcrest is the operator and manager of the Namosi Joint Venture.

NJV has been granted a Special Prospecting Lease (SPL 1420) by the Fijian Government to explore for minerals in the Namosi region, about 30kms west of Suva. The licence area is primarily in Namosi and Naitasiri Provinces.

In addition to exploration, Namosi Joint Venture is studying whether a mine could be developed at Waisoi in Namosi.
The Government has confirmed that under the Environmental Act 2005, the Waisoi Project requires an Environmental Impact Assessment (EIA) to be undertaken to assess the potential impacts of a mine in the area.

The Waisoi Project environmental impact assessment is underway and is anticipated to be completed in 2013. The miners believe if a mine at Waisoi can be safely and economically developed, it would bring significant economic opportunities to the local and wider Fiji community.

The Fijian Government has given the green light to the Namosi Joint Venture to recommence all activities relating to special Prospecting License.

These activities include exploration, project studies and Waisoi Project Environmental Impact Assessment until 2015.

The Prime Minister Commodore Voreqe Bainimarama made the decision following the successful rehabilitation of environmental issues raised by landowners earlier this year.

Under the Government’s direction, the Tikina Namosi Landowners Committee and Namosi Joint Venture have worked in partnership to address landowners’ concerns that enable both parties to develop a cooperative way forward.

Government and the landowners will meet again once the Environmental Impact Assessment is completed.

Locals living along the Hidden Valley polluted Watut River in Morobe Province wants Bulolo MP and Deputy Opposition leader Hon. Sam Basil to honor his commitment and offload the court case against Australian Newcrest Mining and South African Harmony Gold – operators of Hidden Valley Mining in Morobe Province commonly referred to as Morobe Mining Joint Venture (MMJV) to Union of Watut River Communities Association (UoWRCA) Incorporated.

Speaking on behalf of its members, UoWRCA President Mr. Reuben Mete made the call today while addressing some of its members in Middle Watut.

“Basil has made commitment to offload the court case to us last year at a public forum in Sir Ignatius Kilage Stadium and also on several conversation with him and promised to do that before the general election but he hasn’t done so to this date”, Mete said.

He might have other interest in this issue which is unknown to us. Mr. Mete also question the joint media statement done by Morobe Mining Joint Venture and Bulolo District Member Parliament late 2010 on ‘Expert technical advisory panel’ to review the Watut River System as a total misleading and giving false hope to the people of Watut and Papua New Guinea.

A private meeting held by the Member for Bulolo and the Joint Venture in Australia on 14th March 2011 to identify satisfactory resolution of the issues without having to go through lengthy and expensive court proceedings was also put to question as any such meetings should involve the local people representatives and participation.

The mine related sediment in the Watut River has caused community concern due to the run-off from mine overburden and construction activities prior to the mine transitioned from construction to operation in October 2010. During the early stripping stages of Hidden Valley Project up until now sedimentation has been a problem affecting Watut River Communities destroying gardens, fertile soils, covering up drinking waters sources, diminishing of aquatic lives from the rivers such as prawns, ills and fish with Flash floods washing away footbridges and sacred sites and causing skin rushes.

Petromin PNG Holdings Ltd Managing Director Joshua Kalinoe recent media statements responds to Harmony Gold Chief Executive Graham Briggs that state would pay for participation in the project did not seem to go down well with the mining impacted communities’ along the Watut river.

President of the Union of Watut River Communities Incorporated Mr. Reuben Mete says Petromin as the State’s nominee to participate in Wafi-Golpu is a slap to the face of the impacted communities. Mr. Mete said state would have compromises its roles as the regulator of the environment and mining when it is in business with mining companies.

This has become a norm in this nation and we the small people are fed up with this type of hypocracies while development is forced down our throats.  We already have 10 large mines in this nation and yet there is no impact of mining boom on the lives of ordinary Papua New Guineans. The social environmental indicators of development in this nation tell a contradicting story while mining companies talk about sustainability given the non-renewable resource and its benefits to Papua New Guinea.

Enough of Mining propaganda in this nation , we may have just come out of stone age life but we can read A,B,B and count 1,2,3 so please do not insult our intelligence as the government still lacks capacity to regulate this industry given the background of numerous unresolved issues over other mines. Let the regulator be the middle man rather than being a referee and a player at the same time which should have been describe as a conflict of interest.

Petomin has a poor record with social and environmental issues in the Tolokuma Gold Mine in Goilala hence, they should not be allowed into Wafi-Golpu. The people should rise-up, stop the project and demand Petromin off the hook. The South African Harmony Gold and Newcrest of Australia also polluted Watut River with sediments and toxic from the Hidden Valley Mine and yet the Government Regulatory arms are doing nothing about it.

Wafi-Golpu Mine would cost US$4.8 billion to develop and was estimated to produce up to 550,000 ounces of gold and 330,000 tonnes of copper annually for 26 years.

A Local Land Court Decision in 1981 awarded ownership of Mangense Land to the Babuaf (Babwaf) clan which covers Wafe (Wafi) Explorations License (EL) 440 and EL 1105.

The Babuafs are Lower Watut River people and they speak the Wampar (Markham) language. Wafe (Wafi) in their language means crab, in particular little black and red crabs that live along the banks of rivers in their area and that is where Wafi derived its name.

The Babuaf are split into two sub-clans Babuaf Saab and Babuaf Wale.

The 1981 Local Land Court decision that awarded ownership of Wafi and in particular EL 440 and EL 1103 still stands. It has never been set aside and appealed successfully by any disputing parties in the fight for ownership of the land at the Wafi-Golpu Mining Project on the borders of Bulolo and Huon Districts in Morobe province.

Wafi-Golpu according to latest exploration statistics is said to become the third largest mine in the World but some experts are predicting that it will be the largest.

However, landownership of EL 440, 1105 and 1103 is still being disputed and the fight lingers on in the court rooms of Bulolo, Mumeng, Lae and Port Moresby.

The dispute centres more on EL 440 and 1105 which is Wafi while EL 1103 is Golpu.

Court Documents dating as far as 1981 obtained by Post-Courier from a Bill Itamar, the Chairman of Sa’ab Babuaf Resources Limited, is contrary to what other claimants have stated in the newspapers and have reported to reporters and media outlets.

A Local Land Court sat in Mumeng in 1981 and 1982 after hearing all evidence, awarded the ownership to Babuaf, based on ancestral evidence.

That decision was appealed by Engabu (Hengabu- the same) tribe of Mumeng in 1983 to the District Land Court but the decision of the Local Land Court was upheld and the case was thrown out.

Mr Itamar said another appeal was launched through the District Land Court and was thrown out because the rules of the courts were not followed.

He said their ownership was also recognised by the National Court through Originating Summons 19 of 1987 before Justice Woods.

“All these decisions have not been challenged for the last 31 years and other claimants are misleading everyone,” he said.

According to the documents Babuaf then sought to evict the Engabus and an Eviction Order was granted in 1983 for the Engabus to be evicted from the vicinity of the Wafi-Golpu project area.

That order was reinforced again through Originating Summons 736 in the National Court in Lae before Acting Judge Justice Nema Yalo in 2008.

Mr Itamar said Justice Yalo had ordered for the Engabus to be evicted and that they are unlawfully occupying the land but they have defied the Court Orders to date, and are in Contempt of Court.

He also clarified that the Hengabu and Yanta clans only have 50/50 Compensation Rights at Wafi-Golpu for destruction of gardens, cash crops and sacred, ceremonial trees and grounds.

He said they want the Special Land Titles Commission discontinued by the Somare-Abal Government to be reconvened by

O’Neill/Dion Government and for the matter to be heard and be put to rest once and for all.

The matter is afoot in the Supreme Court in Port Moresby and is sought by Thomas Nen on behalf of Babuaf clan and others

South African analysts cautioned South Africa’s Harmony Gold against going ahead with its $5-billion Papua New Guinea (PNG) project for which it was failing to get credit in its share price.

In an interactive Harmony Gold investor day session on Wednesday, Afrifocus mining analyst John Kransdorff, speaking spontaneously from the floor, said that in the Golpu project in PNG, Harmony had a “tiger by the tail”, which was of investor concern.

Harmony had earlier calculated that the cost of the initial stage of the Golpu project, in which it was in a 50:50 joint venture with Newcrest, of Australia, would be $5-billion.

Kransdorff also urged Harmony CEO Graham Briggs to review the company’s big-project strategy and look to smaller quick-cash projects to lift its share price, adding that Golpu was big in relation to the size of Harmony’s $4-billion market capitalisation.

He said that shareholders, who were looking for yield, would have to wait another seven years before the exploration project became a producing copper/gold mine that would yield cash.

Until then, it would consume cash generated in South Africa, another analyst remarked, while urging  Harmony to devote more presentation time to producing South African mines and refrain from continuing to give its PNG assets, which were really ‘tomorrow’s gold’, disproportionate exposure.

In his response, Briggs said that the value that Harmony had added to its PNG assets by taking them up the value curve had not been reflected in the company’s share price.

In response to a query from Deutsche Bank mining analyst Anna Mulholland, Harmony South East Asia CEO Johannes van Heerden said that there were no specific terms in the agreement between Harmony and Newcrest that included the right to buy out one another’s interests.

Elaborating on Kransdorff’s comments, JP Morgan analyst Steve Shepherd said Harmony was “a tiny company” to start developing massive orebodies and that it was clear from Harmony’s stock  trading at way under half of its net present value that the market did not believe that the company was big enough to develop the PNG orebodies.

Shepherd asked whether the time had come for Harmony to house its PNG assets in a separate exploration company in which Harmony could be a significant shareholder.

Briggs responded that while Harmony’s market capitalisation was small, the company was the world’s ninth-largest gold producer and was turning out gold at a good margin of profit.

With gold at $1 600/oz, the company would be able to fund the development of Golpu.

In its 2012 financial year, Harmony funded all of its capital expenditure, and increased exploration and dividends for the third consecutive year.

It had increased its operational profit by 80% in the 12 months to June 30, against a gold price increase of 36% and its cash flow rose by R2-billion to R4.7-billion.

“We’re a big company when it comes to gold production,” Briggs said, adding that the company continued to engage with shareholders.

Ten Harmony shareholders own 65% of the company and twenty own 75%.

“Obviously, if our shareholders want to make 19 phone calls, they can actually instruct us what to do, but they haven’t,” he said.

Because gold would be produced as a by-product of copper at Golpu, the gold would be more than fully paid for by the copper alone, assuming a gold price of $1 650/oz and a copper price of $3.50/lb.

Golpu would be a mine that was on the lowest cost quartile of both the copper producers and the gold producers, with an expected copper cash cost of $0.54/lb.

SOUTH AFRICAN MINING

Kransdorff said that the South African mining industry, as a whole, had done a poor management job, which had resulted in the problems being experience the platinum sector.

He said that many of the far higher price-earnings ratios of the shares of other Johannesburg Stock Exchange companies were indirectly dependent on the success of South African mining companies.

If local mining companies failed, those price-earnings ratios would no longer be sustainable, but that message had failed to get across, for which he criticised the management of South African mining companies.

He said everything came back to management as far as the current platinum-sector impasse was concerned.

A Newcrest Mining rally was cut short yesterday after pre-feasibility studies into one of its big growth opportunities, the Wafi-Golpu project in Papua New Guinea, indicated lower than expected production figures and a blowout in forecast capital expenditure to $US9.8 billion.

The pre-feasibility study disappointed investors buoyed by the resumption of mining at Newcrest’s flagship Lihir mine in PNG, also announced yesterday. Newcrest shares rose to $27.26, before falling back to close flat on $26.70.

Newcrest revealed base case and enhanced production estimates for the Golpu deposit, of between 400,000-580,000 ounces of gold a year, and 250,000 to 300,000 tonnes of copper a year.

This fell short of Deutsche Bank estimates of 600,000 to 800,000 ounces of gold a year, and 300,000 to 500,000 tonnes of copper a year, based on previous Newcrest forecasts.

In addition, Deutsche had forecast $3 billion to $5 billion in capital expenditure, but Newcrest estimated $US4.8 billion in initial capital costs before first production in 2019, while total capital expenditure over the 32-year life of the project would total $US9.8 billion.

Golpu, a 50-50 partnership between Newcrest and Africa’s Harmony Gold Mining, is part of the Wafi-Golpu project in the Morobe Province of PNG. Golpu would move into full feasibility in the first half of next year, Newcrest said.

Golpu was a ”world-class deposit with an expected mine life in excess of 25 years and project unit cash costs at the bottom of the industry cost curve”, the company said.

Newcrest lifted its ore reserve estimate for the Golpu deposit to 12.4 million ounces of gold (up from 1.3 million ounces) and 5.4 million tonnes of copper (up from 0.8 million tonnes).

Newcrest said a concept study was under way to assess Wafi development options, leveraging infrastructure planned for the nearby Golpu deposit.

For Wafi, Golpu and the nearby Nambonga copper and gold deposit combined, indicated mineral resources totalled 22.9 million ounces of gold, 7.46 million tonnes of copper and 42.4 million ounces of silver.

A further 5.7 million ounces of contained gold, 1.6 million tonnes of copper and 8.1 million ounces of silver were defined as inferred mineral resources.

Meanwhile, mining resumed yesterday at Newcrest’s Lihir operations after two days of industrial action following a dispute over a benefits package review.

”The parties have defined a pathway to resolve the causes of the dispute and agreed to work in a renewed spirit of co-operation to conclude the review of the Integrated Benefits Package,” Newcrest told the market yesterday.

Harmony Gold Mining, South Africa’s third-largest gold producer, said Papua New Guinea would have to pay if it wanted a stake in the company’s promising Golpu project in the Asian country.

Harmony is staking its future on the $4.8 billion project it is developing with Australian group Newcrest Mining.

Papua New Guinea has the right to a 30 percent stake in mining operations. Harmony chief executive Graham Briggs said on Wednesday if the government exercised this option it would include development costs already forked out.

“This is not a free carry, it will be full participation if the government gets involved. Assuming they would take 30 percent, they would have to pay 30 percent of the historical costs,” Briggs told analysts on a conference call.

The gold and copper project’s prefeasibility study estimates an initial mine life of 26 years with annual production of 490,000 ounces of gold and 290,000 tonnes of copper.

The aim is to start production in 2019.

Briggs said it was difficult to say whether the government was in a position to pay for the stake but he said discussions with ministers suggest they see the project as generating significant growth for the region.

“This is certainly a game changer in Papua New Guinea, it could add considerable amounts to the GDP and there are lots of opportunities for the government to leverage off this,” he said.

NO FUNDING SEEN REQUIRED BEFORE 2017

Results of the prefeasibility study peg the cost of establishing a copper-gold development at around $4.8 billion, which will be shared evenly by Harmony and Newcrest.

Chief Financial Officer Frank Abbott said the firm would consider debt or bonds to top up its capital expenditure needs as the production of its Papua New Guinea operations gets nearer.

“We don’t see the need for additional funding until 2017 and then it will depend on the gold price,” Abbott said.

He indicated that if the gold price remained in the $1,600 an ounce range, the company would need to raise 4 billion rand ($475 million) but if it dipped to $1,400 an ounce it would require almost double or 7 billion rand ($832 million). Spot gold is currently fetching about $1,665.00.

The project is a game changer for Harmony as it diversifies production away from high-cost and politically-risky South Africa, where labor violence in the platinum belt has killed 44 people this month.

The company currently gets 90 percent of its output from South Africa and aims to lift production to 1.7 million ounces by 2016 from a target 1.3 million ounces in 2013.

Harmony Gold Mining Co. said Wednesday that its gold equivalent reserves are up 31% on the year, due mainly to an increase at its Papua New Guinea project.

The Wafi-Golpu copper-gold project, a 50-50 joint venture with Newcrest Mining Ltd., now accounts for 42% of total reserves of 52.9 million troy ounces, Harmony said, compared with just 11% last year.

South Africa accounts for 32% of Harmony’s total gold equivalent mineral reserves.

“This is a game changer in Papua New Guinea,” Harmony Chief Executive Graham Briggs said, accounting for much of its gold output growth in the coming years. To bring the project into first production will cost $4.845 billion, Harmony said.

Harmony said it plans to get a mining license for the project around 2015. Currently it has an exploration license for the property.

Harmony said its share of project expenditure up to completion of the feasibility study is expected to be about $400 million, plus an additional $270 million before it receives all approvals and permits necessary for construction to commence in mid 2016.

The project will require significant infrastructure development, Harmony said, including power supply and transmission facilities, bigger roads and water management plants. Harmony said it may at some point have access to hydroelectric or gas-fired power later in the mine life, but that will require consultations with the government.

Following completion of a pre-feasibility study at Golpu, Harmony said its reserves stand at 450 million metric tons at 1.21% copper for 12.4 million ounces gold and 5.4 million tons copper declared.

Newcreat Mining and South African partner Harmony have confirmed their Wafi-Golpu project in Papua New Guinea’s Morobe province as a world class gold-copper development opportunity.

But it will also come with a world-class development bill – the pre-feasibility study for the project pegs it at $US4.8 billion ($4.62bn).

The development cost is nevertheless below market expectations for a $US5bn bill and confirms that, on a copper-equivalent basis, Wafi-Golpu will be one of the lowest-cost copper developments in the world on a pound-for-pound basis.

Today’s release of the study came with a new resource estimate for the Golpu deposit which, along with Wafi, are draped over a hillside in the Morobe province, 65km west off Lae. A new resource estimate for Wafi is being worked on.

The all-up resource estimate for Wafi-Golpu and the Nambonga deposit now stands at 22.9 million ounces of gold, 7.46m tonnes of copper and 42.4m oz of silver.

The new indicated resource estimate for Golpu is 12.4m oz of gold and 5.4mt of copper. That is an increase of 11m oz of gold and 4.7mt of copper. A further 5.7m oz of contained gold, 1.6mt of copper and 8.1m oz of silver sit in the inferred mineral resources category.

Wafi-Golpu is currently owned 50:50 by Newcrest and Harmony. The PNG government can take up to a 30 per cent interest in the project at a price equal to the sunk cost. Newcrest has also indicated a willingness to buy Harmony out of the project, but Wafi-Golpu is central to that group’s strategic plan.

First production would be possible by 2019 if development proceeds. In the project’s favour is the fact that gold and copper remain the last of the commodities to hold on to their historically high levels, in the face of the European debt crisis, the slowdown in China and patchy economic growth in the US.

The pre-feasibility study estimated an initial mine life of 26 years with annual production of up to 550,000oz of gold and 330,000t of copper. Cash costs of production were said to be in the “first quartile” when applying either the gold or the copper as by-product revenue.

The release of the study comes as work resumes at Newcrest’s wholly-owned Lihir gold mine on the PNG island of the same. The mine – which is being expanded to annual production of more than 1m oz of gold at a cost of $US1.3bn – was closed on Sunday due to a dispute with local landowners on a compensation-and-benefits package.

Australia’s largest gold miner by market value, Newcrest Mining Ltd., said Wednesday it has resumed operations at its Lihir gold mine in Papua New Guinea after a dispute with a local landowner group closed the site Sunday.

The dispute stemmed from a disagreement on compensation payments to the landowners association, although Newcrest declined to provide further details.

“A meeting was held yesterday involving stakeholders including the landowners and representatives of government,” the company said in a statement. “The parties have defined a pathway to resolve the causes of the dispute and agreed to work in a renewed spirit of cooperation to conclude the review of the integrated benefits package.”

Mining operations restarted Tuesday night and the processing plant is ramping up, it said.

Newcrest produced 604,336 troy ounces of gold from its Lihir mine in the 12 months to June 30, accounting for around one-quarter of the company’s total gold production during the year.

Australia’s biggest gold miner Newcrest has suspended production at its Lihir mine in Papua New Guinea due to a dispute with land owners.

The company said production was being impacted because the Lihir Mining Area Landowners Association (LMALA) was requiring that mine production be suspended until a dispute has been resolved.

“The processing plant remains on stand-by and all facilities have been secured,” Newcrest said in a statement.

All stakeholders, including LMALA and representatives from all levels of government would meet on Tuesday at Lihir to resolve the dispute, Newcrest said.

The company’s shares were down 91 cents, or 3.3 per cent, at $26.31 at 12.15 AEST.

The dispute is related to negotiations over benefits paid to the land owners at the Lihir site.

The open pit mine is located on Niolam Island, also known as Lihir Island, 900 kilometres north of Port Moresby.

It began production in 1997 under the control of Lihir Gold, which merged with Newcrest in 2010.

Newcrest has been working on a major expansions of the mine, and recently said the project was due to be completed in the final quarter of calendar 2012.

Landowners on a remote island in Papua New Guinea have shut down a mine belonging to Australia’s biggest goldminer Newcrest.

The landowners suspended production at the Lihir gold mine by placing a type of ginger plant around the site which is a traditional grievance mechanism.

The move comes amid the five-yearly review of the mine’s benefits package and the landowners say their concerns are not being addressed.

The Lihir Mining Area Landowners Association told a local newspaper they were prepared to close the mine’s water supply and the local airport.

Newcrest says it is meeting with the landowners as well as representatives from the local, provincial and national governments to resolve the dispute.

Shares in the company were down about 3 per cent during Tuesday’s trade.

Settle all outstanding issues, say landowners

Landowners in New Ireland province have shut down the giant Lihir gold mine over outstanding issues with Newcrest Mining Ltd, The National reports.

Lihir Mining Area Landowners Association (LMALA) chairman Peter Suar said from Lihir last night that they had shut down all mine operations at 12.45pm on Sunday by placing the traditional gorgor plant around the mine site. Operations at the Putput plant site, mine pit and the stockpile area at Kapit remained suspended. It is understood that Newcrest officials from PNG and Australia were on their way to the island for talks with representatives from LMALA, Nimamar local level government, Lihir Agreements Review Independent Committee and state representatives (including the Minerals Resources Authority).

Landowner representatives had warned that if the current concerns of landowners were not addressed positively, the immediate future of the intergrated benefits package negotiations would be under threat.

Suar confirmed that operations at the mine remained closed.

“We are doing it professionally and peacefully, with no harm to the public or property.

“We have been patient for a long time. Our birthright is gone.”

Newcrest country manager Peter Aitsi said from Lihir last night that the company would be meeting with landowners today.

“We are hoping to deal with the issue tomorrow (today),” he said.

A notice of intention to place “gorgor” was issued to Newcrest at 11am last Friday demanding that:

• The LMALA integrated benefits package (IBP) budget of K2.5 million be paid within 48 hours;
• The LMALA interim administration budget of K24 million is agreed to until the IBP review was completed;
• Specific outstanding issues to be addressed; and
• Newcrest chief executive Greg Robinson must meet Lihir leaders on the island.

Suar said the gorgor was placed due to the “continuous arrogant attitude” of the developer in not addressing LMALA IBP budget, LMALA administration budget and specific issue agreements of the affected areas within the special mining lease. The 48-hour notice lapsed last Sunday with landowners shutting down operations to the plant site, mine pit and stockpile area.

Suar said Newcrest offered landowners a K2.5 million cheque on Sunday but they refused it.

“Stage two of the action would be to shut down the Londolovit weir where water is sourced to supply the gold processing plant, and stage three is to shut down the Kunaye airport and geothermal.”

Suar said the gorgor would remain until they met Newcrest general manager PNG and Indonesia, Brett Fletcher, PNG country manager Aitsi, operations manager Andy Holdings, lawyer Rob Maloney, IPB review chairman Sir Brown Bai and national and provincial government officials.

“We will meet with Newcrest tomorrow (today) at 1pm,” Suar said last night.

“The company wanted to meet with LMALA officials today but the leaders wanted a formal meeting tomorrow.

Newcrest Mining Ltd. has suspended operations at its Lihir gold mine in Papua New Guinea amid a dispute with local landowner groups, a person familiar with the matter said Tuesday.

The company is due to hold meetings with the local landowners soon, the person said.

Shares in Australia’s largest gold miner by market value fell sharply Tuesday and at 0139 GMT traded down 3.2% at 26.36 Australian dollars (US$27.32).

Newcrest produced 31,350 troy ounces of gold from its Lihir mine in the 12 months to June 30, accounting for almost one-fifth of the company’s total gold production during the year.