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Promising signs from PNG mines

Three big players in the mining game are optimistic about the future

PAPUA New Guinea’s giant Porgera Gold Mine is on schedule despite an extra K 6 million (U 556.32 million) in electricity costs after a landowner dispute delayed power supplies.

The Porgera joint venture partners had been counting on power supplies from the Hides gas field, 70 km away, to be flowing by September when stage 2 of the mine will be commissioned.

But while the power station’s first stage and cross-country transmission lines will be finished in July the land dispute has delayed completion of the nearby gas field and the Bkm pipeline to the power station. The dispute, in which various clans are claiming the right to revenues from the gas field, is now subject to a Papua New Guinea government enquiry.

Two dual fuel generators originally destined for Hides will be taken to Porgera and run on diesel to allow stage two to stay on schedule. The cost of transporting the equipment and the margin between gas and diesel costs will run to K 6 million by next January.

This cost is likely to run beyond that as the new schedule for connection of gas to the Plides power station is no more certain than some time in the first half of 1992.

Otherwise Porgera (Placer Pacific Ltd, Highlands Gold Ltd and Renison Gold fields Consolidated Ltd each have 30 per cent, with the PNG govemmment hold ing 10 per cent) is running to plan. The project’s general manager, Vic Botts, said that all parts of the mine were either on or ahead of schedule.

“That s an achievement in Papua New Guinea,” he said.

The mill is exceeding design capacity by almost 20 per cent. The project’s March quarterly report said 162,369 tonnes of ore was milled in the three months to produce 224,804 ounces of gold. Average head grade was 65.6 grams per tonne. ui c r Porgera now has 15 megawatts of ,• , 6 . , u . 5 ni d.esel-generated power but more will be needed m September to supply the new pressure oxidation plant which will take gold recoveries from the present 70 per cent to more than 90 per cent. The two additional generators being installed will deliver another 13.4 megawatts.

When completed Hides (BP Develop ment Operating Co Pty Ltd 95 per cent, Oil Search Ltd 5 per cent) will produce

64 megawatts enough power to meet Porgera’s needs when the mine reaches its full production capacity. Half of the Bkm gas pipeline between the field and power station has now been completed.

Work at Hides has also been delayed by particularly bad weather.

Revenues due to the local landowners are being held in trust until the Land Titles Commission decides which are the

rightful claimants.

The problem began several months ago when two rival clan groups claimed the Hides joint venture had not settled compensation issues and each claimed they were the sole and rightful recipients.

There were charges against BP of divide and-rule tactics and that some local people had made marks on agreements without knowing what they were signing.

The Porgera mine will meet its aim of producing 900,000 ounces a year even with the power problems. The oxidation plant will, apart from lifting recovery from new ore, also be used on rock already milled and stockpiled and which still contains some gold. Average grade figures for the March quarter were lower than planned because the mill processed almost 1800 tonnes of ore per day instead of its 1500-tonne design maximum. This meant that lower grade ore had to be processed earlier than expected.

The new concentrator capacity will

maintain total gold production after September even as lower grade ore is produced from the underground mine.

Porgera’s open pit operations are due to begin in early 1993.

Increasing production from the Porgera mine gave PNG Explorer Highlands Gold Ltd a heady start to the year. Unaudited net profit for the 16 weeks to April 7 was K 8.25 million, bringing net profit for the first 40 weeks of the financial year to K 18.77 million based on total sales of 140,900 ounces of gold and 105,000 ounces of silver.

Mine production income was supple mented by interest on money left over from the share float in late 1989 when parent MIM Holdings Ltd sold 35 per cent of the company to the public.

Highlands’ report said the company received an average price of SUS 396 per ounce of gold and SUS4.O4 per ounce of silver over the 40-week period.

The company has a 30 per cent interest in the huge Porgera mine in PNG’s Enga province. Porgera’s contri bution to Highlands’ earnings for the 40 weeks was K 27.3 million before tax.

Highlands paid K 54.1 million in Porgera calls for the 40 weeks and debt at April 7 totalled K 89.6 million.

But despite impressive assay results in some drill intercepts for the Uramit prospect (known as Wild Dog) on East New Britain, little continuity was obtained. Exploration is continuing on Mali after outcrops revealed assays of gold, copper, silver and barium. Signs on Manus island in New Ireland province also have been encouraging, where gold was visible after panning. □