Orogen gets into Ramu action with share buy

Orogen Minerals Limited (OML) intends to buy 31.5 percent of Nord Australex Nominees (PNG) Limited’s interest in the Ramu Nickel Project.

This will leave Highlands Pacific Limited (HPL)with 68.5 per cent of the project.

“OML’s purchase of Nord’s interest will significantly strengthen and facilitate the development of the Ramu project, which will make an important contribution to the Papua New Guinea economy,”

Highlands Pacific managing director lan Holzberger said in a statement on the deal.

“As Papua New Guinean companies with a common objective to see the project developed as soon as possible, OML and HPL will work together to finalise permitting and proceed to the financing stage.

“In addition HPL and OML are committed to work together to reinforce the joint venture by introducing a third major equity partner, with both OML and

HPL seeking to sell some of their joint venture equity to an incoming party,”

Holzberger said.

The statement said that following permitting and the issue of the Special Mining Lease, Orogen had also indicated that it intended to exercise its right under the Orogen option agreement with the PNG government to take a further 25 per cent interest in the venture.

After the exercise of this option and before any sell down to a third party, the joint venture equity in the Ramu Project would be HPL 47.95 per cent, OML 47.05 per cent and landowners 5 per cent.

As part of the transaction, HPL and Nord have also agreed to resolve the dispute over the operation of the joint venture. HPL will receive US$l.25 million, payable in three tranches, as part of the settlement.

Highlands has also agreed to a put option with Orogen where, if financing for the project is not secured within two years of completion of OML’s transaction with

Nord, OML may require Highlands Pacific to buy OML’s interest, bought from Nord, for its actual cost.

Downstream processing of the ore will take place in the first operation and the end products will be sold direct to international markets. PNG export earnings are expected to increase by 15 per cent.

The project is expected to produce 32,800 tonnes of high grade nickel and 3,200 tonnes of cobalt a year at an average operating cost, after cobalt credits of USO.4lc a pound of nickel.

This will place the operation in the lowest bracket of the world nickel cost curve.

The mineral resource is expected to support a mine life of 40 years, with a potential to extend beyond the project’s overall life.

Ramu’s annual capacity will be equivalent to 3.5 percent of world nickel production and 10.5 percent of world cobalt production. (Post Courier) ■