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By Geralinda Warre

PORT MORESBY, Papua New Guinea (The National, Mar. 9) –The Papua New Guinea Mining Department has granted a mining lease to Morobe Consolidated Goldfields Ltd for the development of the K450 million (US$144.4 million) Hidden Valley gold project in Morobe province

Morobe Consolidated is a subsidiary of Harmony Gold of South Africa, one of the largest gold producers in the world.

Mining Minister Sam Akoitai said the lease was granted after the company was given an environmental clearance by the PNG Department of Environment and Conservation recently.

Minister Akoitai said he was satisfied with the recommendations made to him by the Mining Advisory Board to issue the mining lease after it thoroughly reviewed the feasibility study and the mining development proposal submitted by the company.

He added the Mining Advisory Board had to wait for the Environment Council to issue an Environment Permit to MCG before the board finalised its recommendations for the issue of the Mining Lease.

"This is a new procedure as required by the provisions of the new Environment Act, 2000," Akoitai said. "My approval of the mining lease means that all the required Government mining and environment permits for the company to proceed to constructing the mine at Hidden Valley are now in place and we look forward to MCG, and in particular, the parent company, Harmony Gold of South Africa to move quickly to commence mine construction operations."

The Hidden Valley gold project is located near Wau in Morobe province. The project is expected to produce around 300,000 ounces of gold and four million ounces of silver per year over a mine life of nine years.

Estimated capital cost for the project is in the vicinity of K450 million.

It is expected that when construction work begins towards the end of 2005, about 550 people will be initially employed by the Company, MCG, and many other new jobs opportunities will also be created within the Wau and Bulolo areas through spin-off business activities resulting from both construction and production period of the mine.

The issue of the ML will now pave the way for the signing of two agreements with landowners, one of which pertains to compensation.

Mr Akoitai said this is good news as he is going to join the Canadian Mining Prospectors and Developers Association (PDAC) International Trade Show and Investors Exchange in Toronto this week, where the Mining Department and several other PNG mining companies will have booths to promote PNG mining industry to investors.

March 10, 2005

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