BOUGAINVILLE COPPER LIMITED MOVES TO DISPOSE OF BOUGAINVILLE ASSETS

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By Fay Duega

PORT MORESBY, Papua New Guinea (April 5, 2001 - The Independent (PNG)---Bougainville Copper Limited (BCL) will move later this month to dispose of the company’s assets on Bougainville. This will take place during the company’s annual general meeting, which will be held in Port Moresby on April 30.

The plan to dispose of the company’s Bougainville assets is one alternative strategy that the board has been considering for some time. It has been foreshadowed at BCL’s last two AGM’s (annual general meetings).

BCL Chairman Barry Cusack said that in addition to the economic and political issues associated with a mine restart is the opposition some on Bougainville have to BCL as mine operator.

He added that it is not a simple matter for BCL to dispose of its Bougainville assets.

"I have had dialogue on this matter with the government and I will move at the AGM that the board be authorized to dispose of the Bougainville assets on such terms as it thinks fit," Mr. Cusack said.

BCL is considering disposing of its assets because since the cessation of the company’s operations on the island on May 15, 1989, and the completion of the withdrawal of company personnel on March 24, 1990, due to the destruction of company property and the harassment of staff, the prognosis for opening the mine is no better.

Eleven years down the track and the company personnel are not allowed access into the mine site to check on their property. Following cessation of mining activities, in 1991 a general provision of K 350 million (US$ 109,200,000) was made for deterioration, damage or pilferage of company assets on Bougainville.

The accuracy of that provision cannot be proved, because the lack of access to Bougainville presents a detailed assessment of the nature or extent of those losses.

Mr. Cusack said that the board had also taken advice from a number of experts on both liquidating the company and making investments in other than interest bearing deposits. The board had decided to recommend to members that it be authorized to seek alternative investment opportunities such as investment in equities, including companies with projects in PNG.

The aim is to grow the value of the company rather than maximize available cash. This new investment strategy is not contingent on BCL disposing of its Bougainville assets, however having made a decision to do so, it no longer has the requirement to preserve cash to allow it to undertake a mine restart feasibility study.

Meanwhile, despite the closure of the mine for the last 11 years, BCL has recorded a net profit of K 15,793,988 (US$ 4,927,724) last year. This is an increase from the K 13,927,602 (US$ 4,345,412) recorded in 1999.

The company’s main source of income remains interest on cash investments in PNG.

BCL is owned 53.6 per cent by Rio Tinto Ltd. The Papua New Guinea government owns 19.1 percent, with the remaining 27.3 per cent of the share capital held by public shareholders.

Due to the on-going closure of the mine, no dividends have been declared with regard to year 2000.

For additional reports from The Independent, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/The Independent (Papua New Guinea).

Provided by Vikki John ( VIKKI@law.uts.edu.au

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