PNG’S OK TEDI MINE POSTS $1 BILLION INCOME

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PNG’S OK TEDI MINE POSTS $1 BILLION INCOME $444 million in dividends went to the PNG government

PORT MORESBY, Papua New Guinea (PNG Post-Courier, Feb. 21, 2008) – Papua New Guinea is among major beneficiaries as copper/gold miner Ok Tedi Mining Limited records income of PGK5 billion [US$1 billion] for the year ended December 31, 2007.

This is compared to PGK4.64 billion earned in 2006.

Dividends paid by the Western Province based mine from last year’s earnings totaled PGK1.4 billion [US$517 million] of which PGK1.2 billion [US$444 million] was for the benefit of PNG interests including the State. Total taxes and dividends for the year were close to PGK1.3 billion.

OTML said in its "Summary of key results" that full year sales revenue was PGK5 billion, 8 percent higher than 2006 reflecting sustained high copper prices, 12 percent higher average gold price and 7 percent higher volume of concentrate shipments.

Net profit was PGK2.04 billion compared to PGK1.88 billion for 2006.

Total gold production for the company was 498,790 ounces which was 9 percent lower than 2006 production but maintained to keep OTML among the top three PNG gold producers. The company also reported that net cash generated last year before dividends was down on the previous year due to the combined effect of higher spending on capital projects, timing issues on the payment of income tax relating to other years and a large increase in working capital. OTML also reported that mining royalties were 11 percent lower than 2006 with the Fly River Provincial Government and mine area landowners each receiving PGK45 million. On the expenditure, OTML paid PGK58 million in other compensation during the year which included land lease payments, trusts and Community Mine Continuation Agreements (CMCA). "Mid-term CMCA review was successfully finalized during 2007 and involved over 500 villages and regional meetings with independent facilitators and observers," the company said.

"Agreement was reached on a four-fold increase in payments by OTML as part of an overall increased benefits package totaling just over PGK1 billion."

The company also said that the mine waste and tailings project to remove pyrite from mine tailings, thus reducing future impacts on the river system was approved by the Government and was currently under construction.

Commissioning of the plant is due to start in July.

Ok Tedi realised an average copper price for the period of US$3.35 (PGK9.86) per pound, compared to US$3.24 (PGK9.54) for 2006.

OTML's shareholders are PNG Sustainable Development Program Limited (52 percent), Inmet Mining Ltd (18 percent) and the National PNG Government (30 percent). The PNG Government holds equity directly (15 percent), and on behalf of the Western Province (12.5 percent) and landowners from the mine area (2.5 percent).

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