Lihir delay

DELAYS face the rich Lihir Island gold project after internaional bankers made it clear to the project partners that they are wary of lending money for any mine in troubled Papua New Guinea. The Bougainville crisis and other bad news coming out of the country has soured Papua New Guinea’s investment image, as the Lihir partners realised when they started sounding out bankers who will be required to lend at least US$5OO million possibly as high as SUS7OO million to develop the gold mine to operational stage.

Niugini Mining Ltd (20 per cent) and Kennecott Explorations (Australia) Ltd (80 per cent) are now planning to have the SUSI billion gold mine in production by some time in 1993. Niugini’s corpo rate development manager, Rex Adams, said both partners had sounded out the international financial markets and the response had not been enthusiastic.

Adams said the production timetable had become “very rubbery” since Bougainvil le, and the new production timetable took the financing problems into account.

Earlier, Niugini chairman Geoffrey

Loudon said the banks were not refusing outright to lend money for the Lihir pro ject, but they were “just being coy. There are not too many banks wanting to lend to Papua New Guinea at the moment.”

He said people read of the Papua New Guinea troubles, including the recent coup threats, and became alarmed.

The latest blow to the resource hopes of Papua New Guinea comes on top of demands by several local parties for local control of an old pipeline which the Chevron Niugini Pty Ltd-led consortium will build to tap the lagifu oil field.

With the loss of 17 per cent of its national budget after the closure of the Bougainville copper mine, the Govern ment in Port Moresby is desperately

awaiting several large mining and oil

projects to start producing replacement

revenue. Lihir’s planned output is 250,000 oz of gold in its first year, build ing to more than 700,000 oz a year.

While mining on an isolated island in the northern reaches of Papua New Guinea poses communications and trans

port problems, the mining companies are

unlikely to face the civil unrest or land holder demands which have plagued other resource projects there are few er than 10,000 people on Lihir.

Meanwhile, the companies are under taking final detailed drilling on the areas where initial mining will take place. The

project’s feasibility study has been sub

mitted to the Papua New Guinea Depart ment of Minerals and Energy. □