Newcrest defends PNG operations

AAP

AUSTRALIA'S largest gold miner Newcrest Mining has urged shareholders to keep the faith in the company's long-term picture after a series of hostile questions at its AGM in Melbourne today.

A rash of problems at its Lihir mine's processing plant in Papua New Guinea led to suspensions in operations, falls in production and sales and rises in costs in 2012, offset by a high gold price currently at about $US1,700 an ounce.

Shareholders accused the board in Melbourne of not conducting enough due diligence on plant equipment before buying the project in 2010, something chief executive Greg Robinson has conceded.

He also warned there was a reasonable chance that there would be more operational issues there this year but guaranteed output at Lihir would be higher, to between 700,000 ounces and 900,000 ounces.

"We make no apologies to anyone for having a broad range, it's just what happens when you deliver an operation reliability program and major operation all in one go,” Robinson said.

He said the value of the project - Lihir Gold was acquired for US$9.5 billion in 2010 - would shine through with annual output doubling within five years to 1.2 million ounces.

The reserve and resources at Lihir was upgraded from 48 million ounces of contained gold to more than 56 million ounces this year.

"There's a long term and short term story on this one, we have a short term fix and think the long term value of the equation is still good," Robinson said.

"At the moment 80%- plus of our effort there is going into making the plant reliable and ensuring that drumbeat of production, day in-day out for weeks and months meets our expectations."

 Robinson says that while he expected the plant would need investment, the urgency with how quickly equipment had to be repaired had surprised people.

A US$200 million a year "rectification" programme is now taking place.

Newcrest is already the nation's largest gold play but has embarked on a massive expansion including spending more than US$3 billion building the Cadia East underground mine in central western NSW - which will be Australia's largest - and developing Lihir.

It also aims to have the estimated 400,000 to 580,000 ounces of gold a year, US$4.8 billion Wafi-Golpu gold/copper project in PNG in production by the end of the decade.

 The company produced 2.3 million ounces of gold this year, is forecasting 2.3 to 2.5 million ounces in 2012-13 and for that to climb above three million within the next few years.

Gearing is low at only 12.5% with most debt due in 10, 11 and 30-year maturities.

Newcrest shares closed 48 cents lower at $26.01.

Oil Search optimistic about PNG project

By Barry Fitzgerald of The Australia

OIL Search has revealed that early studies on the expansion of the yet-to-be-completed $US15.7 billion ExxonMobil-led LNG project in Papua New Guinea have formally begun.

The company said in its September quarter report, released Tuesday, that while the two train LNG project was making good progress and remained on target for first LNG shipments in 2014, work was under way on development options for the P'nyang gas discovery to become a "foundation resource" for a third processing train.
Oil Search is a 29 per cent partner in the LNG project which has not been hit by the delays and cost overruns that have plagued gas export projects in Queensland and Western Australia.
Oil Search said P'nyang would now be moved into the front-end engineering and design phase, and that preliminary studies on potential design concepts and costs had started.

The existing two-train LNG project will be transformational for both Oil Search and PNG.
Oil Search's quarterly report showed its oil and gas production interests in PNG were affected by the shutdown of port loading facilities to determine the cause of what proved to be a "minor oil sheen" on the water surface in July.
The sheen, estimated to be four to eight litres, prompted a decision to suspend loading operations and carry out an inspection.
"The full integrity of the oil export system was confirmed, with no source of any leak found. "Loadings resumed in late August," Oil Search said. 
Both production and sales revenue were hit.
Key producing fields were shut-in for much of August. 
As a result September quarter production at 1.33 million barrels of oil equivalent was down 26 per cent on the 1.8 mmboe in the June quarter.
However, Oil Search said "production for the 2012 full year is still expected to be within the 6.2- 6.7 mmboe guidance range".
The company secured a $US500m revolving line of credit and has a cash balance of $US573.2m.
When cashflow from operations is added in, Oil Search believes it is in a strong position to fund all foreseeable expenditures ahead of production from the LNG project.

Newcrest sees room for dividend hike

Market Watch

Newcrest Mining Ltd today said its shareholders may be in line for greater dividends if the gold price remains strong, forecasting that its capital needs will fall as new mines edge closer to development.

Chairman Don Mercer told the company's annual shareholders’ meeting in Melbourne said it will be able fund new projects such as the Wafi-Golpu mine in Papua New Guinea with South African partner Harmony Gold Mining Co mostly from its cash flow in future.

"Sustaining this position, other things being equal, should allow for greater dividend distribution to shareholders in the future,"Mercer said.

He said Newcrest--Australia's largest gold producer by market value--felt it was prudent not to pay a special dividend for the 2012 financial year.

The ordinary dividend for the year was increased 17%.

Newcrest is targeting sustained annual production of more than 3 million troy ounces of gold within a few years.

Nautilus seabed mining project jeopardised again

By Cecilia Jamasmie of mining.com

Canada-based Nautilus Minerals Inc sank to fresh lows Wednesday in London, falling almost 5%, hit by the news of a Papua New Guinea’s landowners petition to the government to cancel the firm’s seabed mining permit.
The company, the first to explore the ocean floor for polymetallic massive sulphide deposits, was granted a mining lease by the PNG authorities in January 2011, following the environmental permit award in December 2009.
But the mine developer has been swimming in choppy waters ever since.
 It faces critics from the environmentalist and the marine biologist community as per the consequences of its Solwara 1 gold, copper and silver project. 
The company has also been locked in a dispute with the government of the South East Asian nation since June over ownership of the project, located in the Bismarck Sea.
Over 20,000 signatures submitted to PNG Mining Minister Byron Chan by residents from the provinces of Madang, Oro and New Britain, stating that they don’t want the project to go ahead, reports Radio New Zealand.
Locals insist they have seen dead fish washing up on beaches and that the water has been polluted by the exploration work.
The Canadian mine developer was granted a 20-year permit by the government of Michael Somare to mine an area in the Bismarck Sea to a depth of 1.6 kilometres.
 Nautilus has said it plans to begin extracting minerals from the Solwara 1 deposit in 2014.
The new PNG government, led by Peter O’Neill, is reportedly challenging the deal and wants to make a number of amendments, according to Radio New Zealand.
Shareholder in Nautilus have seen the value of their investments plummet by more than half since the company initiated the legal battle on June 1 over Solwara.

ExxonMobil eyes P'nyang gas as basis for PNG LNG plant expansion

PLATTS

The ExxonMobil-led joint venture which holds the P'nyang gas field in Western province is conducting pre front-end engineering and design studies to use the newly-discovered resource as the basis for an expansion of the PNG LNG project, partner Oil Search said Tuesday.

"The PRL 3 joint venture has agreed to move forward into the pre-FEED concept selection stage, with the primary option being to utilise P'nyang as a foundation resource for train three (at the PNG LNG project)," Oil Search said in its latest quarterly report.

"Preliminary studies on potential design concepts and costs have now commenced."

The work is expected to continue through to the end of 2012, Oil Search added.

The PRL 3 permit containing P'nyang is held 38.5% by Oil Search, 49% by operator ExxonMobil and 12.5% by JX Nippon.

ExxonMobil is also the operator of the $15.7 billion PNG LNG project, which is currently two years into a four-year construction schedule and is on track to start up in 2014.

The liquefaction facilities will comprise two LNG production trains with total capacity of 6.6 million mt/year.

Oil Search, which operates all of PNG's producing oil and gas fields, posted net output for third-quarter 2012 of 1.33 million boe, at an average of 14,466 boe/d.

Output was 26% lower than the second quarter's 1.8 million boe due to an initial curtailment and then a full shutdown of production for nearly four weeks while investigations were undertaken to identify the source of a minor oil sheen on the sea surface close to the Kumul marine terminal.

No source of any leak in the oil export system was found and loadings resumed in late August with no reappearance of the sheen, the company said.

"Once production resumed, there were some delays in establishing optimal plant operations," Oil Search added.

 "In addition, major flooding in PNG during the quarter had an impact on logistical and operational activities."

Oil Search managing director Peter Botten said strong oil production had been recorded since operations resumed and despite the shutdown, output for full-year 2012 was still expected to be within the company's 6.2 million to 6.7 million boe guidance range.

Oil Search's operating revenue for the third quarter of 2012 was $107.8 million from oil sales of 680,000 barrels.

Sales were substantially lower than in the second quarter due to the suspension of liftings during August, partly offset by higher oil prices.

Shortly after the end of the quarter, French major Total farmed into Oil Search's exploration acreage in the PNG Gulf area.

"Total has extensive experience in developing major LNG projects and has similar aspirations to Oil Search in assessing and, in the event of success, developing an LNG project in the Gulf of Papua," Botten said.

Duchess to help combat domestic violence in PNG

By Andrew Drummond of AAP

THE Duchess of Cornwall will visit a women's refuge in Papua New Guinea during an upcoming royal visit in an attempt to combat domestic violence.

The Duchess of Cornwall will visit a women's refuge in Papua New Guinea during the royal visit. AAP

Camilla, 65, arrives in Port Moresby on November 3 with husband Prince Charles for a two-night stay, the start of a Diamond Jubilee tour representing the Queen that also takes in Australia and New Zealand.
"Domestic violence is a key social problem in PNG and, given the Duchess of Cornwall's work in these sort of areas in the UK, the PNG authorities have asked her if she will visit a women's refuge ... to help draw attention to this problem, to draw it out of the shadows and enable people to undertake the vital work necessary to tackle this very difficult problem," a senior royal spokesman told media during a briefing at London's St James' Palace.
Camilla will visit the Haus Ruth Women's Refuge on November 5, while Charles meets with Prime Minister Peter O'Neill and Leader of the Opposition Belden Namah.
The royal couple will venture out of Port Moresby only once during their time in PNG, with a planned day trip to take in Boera Village and the National Bird of Paradise and Orchid Garden.
"(Papua New Guinea) really is so beautiful and the Prince is greatly looking forward to introducing the Duchess to some of its biodiversity, from Birds of Paradise - the national bird - (to) some incredible rare and beautiful orchards," the spokesman said.
Charles and Camilla leave Port Moresby on November 5 bound for Longreach to start the Australian leg of their tour.

Charles and Camilla's tour details revealed

The royal couple has a packed itinerary of events for a tour of Australia, New Zealand and Papua New Guinea next month.

By Jonathan Samuels, Australia Correspondent, Sky News

The Prince of Wales and Duchess of Cornwall will be treated to a barbecue in the outback, an afternoon on Bondi beach and a tour of a special effects workshop used in the making of The Hobbit movie when they visit Australia and New Zealand.

Details of their packed tour, which also takes in Papua New Guinea as part of the Queen’s Diamond Jubilee celebrations, have been announced.

Camilla will be making her first trip to the three countries, in a private or public capacity, while Charles, a seasoned traveller, has visited the southern hemisphere nations many times.

Among the highlights will be a visit by Prince Charles behind the scenes of the new blockbuster movie from Lord of the Rings director Peter Jackson.

He will visit a leading workshop in New Zealand that created special effects for the much anticipated fantasy film The Hobbit: An Unexpected Journey.

The heir to the throne will meet the filmmaker on the day of his 64th birthday, November 14, and be shown make-up props worn by actors including The Office star Martin Freeman, who plays the lead character Bilbo Baggins.

A royal aide said that in the workshop, based in Wellington, Charles would "come face-to-face with rather extraordinary, rather terrifyingly in some cases, life-like prosthetics including the feet and hands of the Baggins family".

The themes of the visit include service to the community, encouragement of economic growth and innovation, promotion of youth enterprise, celebration of sport in the community and support for the Armed Forces.

Speaking about the first leg of the tour to Papua New Guinea, which begins on November 3, the aide added: "The visit is centred on the capital Port Moresby but also includes a visit to a nearby fishing village called Boera where a traditional and probably rather dramatic welcome is planned by the local inhabitants."

 In Australia, the royal couple have set themselves the task of visiting four major cities - Melbourne, Adelaide, Sydney and the capital Canberra - as well as the outback town of Longreach in Queensland and the island state of Tasmania in just six days from November 5-10.

The royal couple has willingly accepted an invitation from race organisers to play an important part in Australia's most famous racing event, the Melbourne Cup, at which Camilla will present the top prize.

"We were asked if they would like to do it, and of course they are both great racing fans ... and very touched that they've asked the Duchess to present the Melbourne Cup," Clive Alderton, private secretary to Charles and Camilla, said.

It is a starring role for Camilla, 65, who will overcome a dislike of air travel to make the long trek south.

Other events will see them highlight healthy eating in schools, meet Australian cricketers playing with disadvantaged youngsters and promote the wool trade.

The final leg to New Zealand, from November 10-16, will see the royal couple meet popular children's author Lynley Dodd, writer of the Hairy Maclary stories about the adventures of a hairy dog.

The final day takes the royal travellers to Christchurch to see how residents have rebuilt their lives after last year's devastating earthquake.

Details of the tour come as a new survey commissioned by the Australian Republican Movement shows 48% of Australians want a republic.

However, perhaps riding on the popularity of the Duke and Duchess of Cambridge, only 45% of under-30s questioned want a republic - fewer than any other age group apart from those 70 or over.