MINES SPRING UP EVERYWHERE IN PAPUA NEW GUINEA

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By Brian Gomez and Bibian Barreng

PORT MORESBY, Papua New Guinea (The National, Oct. 30) – Papua New Guinea’s biggest mining boom is gathering pace, with small, medium and large-scale mines being developed simultaneously in different parts of the country.

The Mineral Resources Authority (MRA) believes gold production will double to around 3.5 million ounces in five years’ time.

Copper production is also expected to more than double from around 200,000 tons a year to more than 500,000 tons, but may fall to around 400,000 tons after the planned Ok Tedi closure in 2013.

MRA managing director Kepas Wali told the annual conference of the PNG Chamber of Mines & Petroleum yesterday mineral export receipts from copper and gold were anticipated to hit a record PGK7.5 billion [US$2.6 billion] this year -- even before a big jump in production over the next two years.

"The last Somare government made huge gains towards our journey to prosperity but the current Somare-Temu government aims to do better in the next five years," Deputy Prime Minister Dr. Puka Temu told the seminar. Temu, who is also Mining Minister, said the major challenge was "how best to manage the benefits to achieve sustainable economic and social development for our generation and many more generations to come."

The highly-upbeat seminar, attended by a record crowd of more than 300 people, heard several mining success stories. They included the newly-commissioned, small Sinivit mine, near Rabaul, that is producing gold at AU$160 [US$147] an ounce, making it one of the lowest-cost gold producers in the world.

Project owner Niugini Gold is looking to start up a second gold mine in Norman by Island, Milne Bay, in 2009.

Allied Gold’s mine at Simberi, only 60 km from Lihir, will have its first gold pour before the end of the year and anticipates that production will rise from 84,000 oz in the first year to around 100,000 oz the following year.

At the giant end of the business, Ramu Nickel’s chief technical director James Wang disclosed that project costs had soared from just over US$800 million to US$1 billion, as has been the experience of similar projects in Australia, New Caledonia and elsewhere.

Describing it as "a very challenging project", Mr. Wang said project construction would start in February next year with commissioning anticipated in September 2009.

Although Ok Tedi managing director Alan Breen confirmed that mining was anticipated to cease in 2013 at the huge ore body -- it generates export revenues of PGK130,000 every 15 minutes and last year paid Papua New Guineans PGK1.5 billion in taxes and royalties -- it seems there may still be life after that deadline.

Mr. Breen disclosed that a pre-feasibility study had begun on "three small ore bodies with 100 million tons of ore" below the Mt Fubilan open pit that could support a seven million tons a year operation.

PNG’s biggest listed company, Lihir Gold, recently increased production capacity by 20 percent by building a floatation plant capable of processing three million tons a year.

Lihir’s general manager for corporate development Graham Folland said yesterday expenditure of another US$500 million to US$550 million would be needed next year for a large autoclave that would make the mine a million ounce a year producer.

South African gold mining giant Harmony Gold, in the short space of five years that it has been in PNG, has built up a resource base of 30 million ounces gold-equivalent, second only to Lihir.

Although it has no PNG production at present, the company’s Hidden Valley mine general manager Adam Wright said slightly delayed production of around 300,000 oz gold-equivalent should begin in early 2009.

It is presently trying to attract a development partner for its Wafi and Golpu copper-gold projects, which could begin production of 65,000 tons of copper and 110,000 oz of gold annually by 2012.

"We hope to have another mine on the basis of our extensive exploration program and bring it into production in a 10-year timeframe," Mr. Wright said.

Just as bullish was junior explorer Marengo Mining, which has begun a full-scale feasibility study at Yandera copper-molybdenum, not far from Ramu Nickel, that it hopes to bring on stream in 2011.

Managing director Les Emery said the record attendance at the seminar showed the mining sector in PNG "is certainly booming."

By the end of this year, Marengo expects to have a team of nine geologists testing copper porphyry prospects in its "Yandera cluster" with indications that even higher grade deposits may be discovered.

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