Good-news Pogera beats the odds

STAGE one of the giant Porgera project in Papua New Guinea has been completed and the first shipment of gold bullion despatched. That this has been achieved without any significant disputes with local landowners or labour problems, is possibly the most important aspect of this an nouncement. The news will lift the spirits of all resources companies operating in the country, coming as it does after all the bad news from Bougainville, which blighted the image of PNG around the world and has hurt other companies trying to raise loan money for projects, including the joint venture partners at the extraordinarily rich Lihir gold deposit.

The joint venture company has also revised resources at its mine upwards by 11 per cent and increased production forecasts. These latter have now been lifted to 900,000 ounces of gold a year over the first six years of mine life, at an average cash cost of about US$105 an ounce, which is at the lower end in world production terms. The average pro

duction cost over the mine’s life is projected at US$l5O an ounce. The previous forecast had been that Porgera would produce 800,000 ounces a year during the first six years. The new figures place the mine among the top six producers in the world.

The Porgera mine will not be operating at full capacity until the end of 1993. The project has measured and indicated min eral resources 0f99.25 million tonnes, but mineable reserves of 6 million tonnes of ore underground with an average grade of 25 grams per tonne (g/t), and open-cut potential of 50.5 million tonnes grading an average 4.07 g/t. The mine is expected to last 18 years and, all up, produce about 11 million ounces of gold. Porgera is a joint venture between subsidiary companies of Placer Pacific Ltd, High lands Gold Ltd and Renison Goldfields Consolidated Ltd (30 per cent each) with the PNG Government holding the re maining 10 per cent through its commer

cial arm, Mineral Resources Porgera Pty Ltd. The project’s general manager, Vic Botts, said that relations with local people had worked well. “So far, so good,” he said . Efforts had been made to keep landowners on side by assisting local people to set up businesses both to service contracts associated with the mine, and also other projects which included a hotel, commercial centre and a supermarket. The joint venture com pany was working with the Enga Provin cial Government to float anew enterprise which would serve as a business develop ment vehicle for the region.

Stage one of the project involves a 1500 tonnes a day plant which extracts about 60 per cent of the gold from the difficult to mill refactory ore. The high grade residue is being stored pending the completion of stage two in a year’s time, which is a pressure oxidation circuit to extact most of the remaining gold. The third and fourth stage involve the lifting of ore treatment to 4500 tonnes a day, then 8000 tonnes a day. The latter stages

of the project also involve the construc tion of a power line to bring electricity generated at the Hides gas field. The total cost of the project is now estimated at K 972 million (U 55908.6 million).

The big news from Porgera was quickly followed by an announcement from one of the mine’s partners, Highlands Gold, that it had earned a maiden profit totalling K 8.5 million after tax in the year to July 1. Highlands Gold is a subsidiary of the Australian mining giant MIM Holdings Ltd and its shares are listed on the Australian Stock Exchange. The com pany’s chairman, Norman Fussell, said that no dividend payments would be considered until Highlands Gold starts receiving cash flow from Porgera.

Highlands Gold revenue for the year totalled K 19.5 million, including the K 3.9 million refund of exploration costs when the PNG Government took up a 10 per cent share of Porgera. There were also net foreign exchange gains of K 7.9 million.

Highlands’ Astrolabe Analytical Div ision, which operates mining laboratories in Port Moresby, Lae and Madang, suffered a revenue drop which the company said reflected the general downturn in exploration activity in PNG and recorded a trading loss of K 216,000.

Apart from Porgera, the company has other interests in Papua New Guinea. In January it bought five prospects in East New Britain, including the Wild Dog prospect, from City Resources Ltd. It has 42.95 per cent of the Frieda River copper gold prospect, 27.65 per cent of the Ramu chromite-nickel-cobalt deposit and as well as 15 other gold properties. Fussell said the company would vigorously pur sue development and exploration to broaden its base in the PNG mining industry. □