Home » PNG Strikes Historic Deal to Reopen Porgera Gold Mine

PNG Strikes Historic Deal to Reopen Porgera Gold Mine

The mine, which was shut down in 2020, will now be owned 51% by PNG stakeholders and 49% by Barrick Niugini Limited.

by Motoni Olodun

The Porgera gold mine in Papua New Guinea (PNG) is set to resume operations in early 2024 after the government and the mine’s joint venture partners reached a historic agreement on ownership and benefits sharing. The mine, which was shut down in April 2020 due to a dispute over the extension of its mining lease, will now be owned 51% by PNG stakeholders and 49% by Barrick Niugini Limited (BNL), a joint venture between Barrick Gold and Zijin Mining of China.

The deal, which was announced on Monday by PNG Prime Minister James Marape and Barrick Gold President and CEO Mark Bristow, marks a significant shift in the country’s mining sector, as it gives PNG stakeholders a majority stake in a major resource project for the first time. The PNG stakeholders include the national government, the Enga provincial government, and the Porgera Landowners Association.

According to the agreement, the PNG stakeholders will receive 53% of the mine’s overall economic benefits, which are expected to amount to more than $ 7 billion over the mine’s projected 20-year life, assuming a gold price of $1 800/oz. The mine, which is located in the highlands of Enga province, has produced more than 16 million ounces of gold and almost 3 million ounces of silver since it began operations in 1990. It is one of the world’s top ten producing gold mines, with an estimated 8.1 million ounces of proven and probable gold reserves.

Bristow said that the Porgera mine “undoubtedly” has the potential to join Barrick Gold’s tier-one gold mine portfolio, which comprises mines that produce at least 500 000 oz/y of gold, have a mine life of at least 10 years, and operate at the lower end of the cost curve. He added that the mine will benefit from Barrick Gold’s operational expertise, technical innovations, and environmental and social performance standards.

Marape hailed the agreement as a win-win outcome for all parties involved and said that it will pave the way for more equitable and sustainable development in PNG. He also thanked Bristow and BNL for their willingness to negotiate and compromise and for their commitment to the long-term future of the mine and the country.

The agreement follows months of negotiations and consultations, which were facilitated by the World Bank’s International Finance Corporation (IFC). The IFC also provided independent financial and legal advice to the PNG stakeholders, as well as technical assistance on environmental and social issues.

The agreement is subject to the satisfaction of certain conditions, including the granting of a new special mining lease to BNL, the completion of legal documentation, and the resolution of fiscal and regulatory matters. The parties expect to finalize the agreement by the end of March 2024 and to restart production at the mine by the second quarter of 2024.

The reopening of the Porgera mine is expected to boost PNG’s economy, which has been hit hard by the COVID-19 pandemic and the decline in global commodity prices. The mine employs about 3,000 workers, mostly from the local communities, and contributes about 10% of the country’s exports. The mine also supports various social and infrastructure projects in the Porgera Valley, such as health, education, agriculture, and women’s empowerment.

The Porgera mine is not the only mining project that PNG is pursuing to revive its economy and create jobs. The country is also developing the Wafi-Golpu copper-gold project, which is a joint venture between Newcrest Mining and Harmony Gold, and the Frieda River copper-gold project, which is owned by PanAust. Both projects have the potential to become world-class mines that will generate significant revenues and benefits for PNG and its people.

Source: Mining Weekly


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