PNG Chamber of MInes & Petrolem Conference Report

Reports

Although some junior companies have found the going tough, especially when it comes to raising new funding, overall mineral-sector activity in Papua New Guinea has proved resilient, with significant progress at all of the major projects.

At the latest count, over 260 exploration licences are now in force, with a further 20 under renewal and more than 100 new licence applications being processed. Gold remains the principal commodity of interest, with copper, nickel, iron and seabed massive sulphide deposits also being targeted.

These were the headlines from a recent two-day PNG Chamber of Mines & Petroleum conference in Port Moresby. A record 300 delegates attended the biannual Mining & Petroleum Seminar.

With the first gold pour achieved in June, Morobe Mining's Hidden Valley operation is the first new gold mine to be commissioned on mainland PNG for 15 years. Hidden Valley is engineered for an ore throughput of 4.2Mt/y from the Hamata, Hidden Valley and Kaveroi orebodies, with peak annual production scheduled at 275,000oz in 2019.

With waste stripping having begun in 2007, by the middle of this year some 800,000t of ore had been stockpiled to await commissioning of the mill, with the joint venture partners, Harmony Gold Mining Co Ltd and Newcrest Mining Ltd, having already begun studies on optimising the plant's throughput and increase production.

Meanwhile, expenditure on the Ramu nickel-cobalt laterite project in Madang province had reached US$930 million by mid-year, out of a total capex cost of nearly US$1.4 billion. Construction completion and commissioning are scheduled for the end of this year, with annual production targeted at 31,150t nickel and 3,300 t cobalt over an initial 20-year life. Construction of the key component of the project, the 135 km-long slurry pipeline from the Kurumbukari mine to the processing plant on the coast at Basamuk, was virtually complete several months ago, with all of the major plant components delivered.

Not only are these new projects nearing completion, but some of the country's existing mines are at various stages of expansion or life-extension studies. Lihir Gold, for example, is currently working on its 'Million Ounce Plant Upgrade' project, while at Porgera, Barrick Gold Corp is exploring both around the existing operation and at depth to identify resources that could extend the mine's current 13-year remaining life.

The Lihir project aims to increase the mine's output to around 1 Moz/y from 2012 for the remainder of its life, the operation having produced 771,000oz last year, and over 7Moz since it came on stream in 1997. Successful exploration during the first half of this year has increased measured and indicated resources at Lihir from 33Moz to 43Moz.

Barrick reported success in increasing resources underground at Porgera during 2008, and current reserves are sufficient to support mining both on surface and underground until 2017. The company is also continuing with its Porgera Deeps programme, exploring the intersections of proven gold-bearing structures below the current underground infrastructure.

Meanwhile, with open-pit closure scheduled for 2013 at Ok Tedi, new efforts are under way to find additional resources within the locality. A prefeasibility study on moving to underground mining began last year, with a feasibility study scheduled for completion in 2010.

Aside from focusing on their Hidden Valley project, Harmony and Newcrest have been working on a number of exploration sites. At Wafi-Golpu, the joint venture has compiled an integrated geological model, and has outlined a mining method for the Golpu porphyry. Other prospects currently under evaluation include Kesiago (copper-gold), Apu Creek (base metals and silver), Yafo and Biamena (both gold), all of which have been drilled recently.

On Woodlark Island, Woodlark Mining is reported to have identified a 1Moz-plus resource at its namesake project, with additional drilling having been carried out in order to improve the resource estimate. Further drilling and scoping studies are under way this year.

Allied Gold Ltd commissioned its mine on Simberi Island in February last year, with the operation having produced 100,000oz of gold by mid-2009. The company has also been able to increase its total resource there to 4.7Moz of gold and 10Moz of silver, including 1.4Moz of oxide resources and 3.3Moz of sulphide resources. Exploration is continuing at both the Sorowar and Pigiput prospects, with Allied having begun plant optimisation studies aimed at a consistent 100,000oz/y output from the operation.

Elsewhere, Barrick has started work on its earn-in commitments over Allied's copper and gold prospects on Tatau and Big Tabar islands. Following on from initial fieldwork and an airborne EM survey over the Tabar Island group, Barrick's targets here have included Tupinda, Banasa and Kupo. The company also spent US$10 million on exploration at its own Kainantu property in the Eastern Highlands during 2008, plus a further US$27 million on mine development

Although gold and copper have formed the foundation for PNG's mining industry in the past, the country's mineral endowment is far more extensive. The prospect of diversification has led a number of companies to begin evaluating a range of other mineral resources, including chromite, nickel, platinum-group metals and industrial minerals.

At Wowo Gap in eastern PNG, Resource Mining Corp (through Niugini Nickel) is continuing to evaluate laterite nickel-cobalt resources, having recently completed a revised resource estimate for the project. Following the completion of a scoping study in 2008, the company is now carrying out further metallurgical testwork to determine the most appropriate treatment process for the mineralisation, with a feasibility study scheduled for completion by the end of this year.

Chromite has been the target for OM Holdings, with the company having completed a limited drilling programme on its Salamua prospect in Morobe province. Sample analysis was scheduled for the first half of this year, with future work being determined by the results of this phase.

Papuan Precious Metals Ltd has a number of active projects, targeting variously platinum, palladium, nickel, chromite, gold and copper at its Doriri Creek, Urua Creek, Dimidi Creek, Upper Ada'u River, Goroa Creek and New Hanover prospects in Oro province.

MIL Resources Ltd, working on Titan Mines' iron sand prospects at Amazon Bay, recently reported the presence of vanadium in heavy-mineral concentrates from sampling there. The company is also prospecting for gold and copper at its nearby Poi licence area.

Meanwhile, Xstrata plc is continuing evaluation work at the Frieda River copper-gold joint-venture project with Highlands Pacific Ltd and Japan's Overseas Minerals Resources Development (OMRD). With a prefeasibility study already under way, a US$36 million infill drilling programme on the Horse-Ivaal-Trukai section of the project has shown porphyry mineralisation extending to over 600m depth.

Industrial minerals such as limestone are also of increasing interest, with a number of Chinese and Japanese companies evaluating the potential for cement production.