Ok Tedi wants PNG government to join it in Xstata's Frieda River Project

Papua New Guinea's Ok Tedi Mining Ltd is keen to buy a stake in Xstata Copper's 5.3 billion US dollar Frieda River project. 

Ok Tedi Managing Director, Nigel Parker, says the company would like to move as soon as possible on the deal and will be talking with the PNG government in the near future.

Radio Australia's Jemima Garrett recently returned from a visit to Ok Tedi and prepared this report.

Correspondent: Jemima Garrett
Speaker: Nigel Parker, Managing Director, Ok Tedi Mining Limited

GARRETT: Ok Tedi is unique among PNG mining companies.
Since the Canadian company Inmet sold out at the beginning of last year Ok Tedi has been 100%-owned for the benefit of Papua New Guineans.
The PNG government has a 37% stake and the PNG Sustainable Development Program Limited the rest.
But Ok Tedi is an old mine - even if the mine extension plan currently under consideration goes ahead - production is set to drop.
Ok Tedi Managing Director, Nigel Parker, is looking for new opportunities for the company.
PARKER: This is an extraordinarily valuable asset. We cannot let this asset die, otherwise the Papua New Guinea nation loses out.
GARRETT: Nigel Parker has been working with Professor Ross Garnaut, Chairman of both Ok Tedi and PNG Sustainable Development Program Ltd, to chart the way foreward.
PNGSDP has taken a stake in Highlands Pacific - a move which forges links to Highlands Pacific's exploration sites just 20 kilometres from Ok Tedi - and to Xstrata Copper's Frieda River deposit through Highlands' minority shareholding in the project.
Frieda River is a big prize. It is a world class copper and gold deposit even bigger than Ok Tedi's original resource.
Xstrata has made it clear it may be willing to sell part or all of its holding.
Nigel Parker says it is an investment that makes sense for Ok Tedi.
PARKER: Frieda River is 70 kilometres north of us. It has some very good results. It is like an Ok Tedi 30 odd years ago, in a pristine environment. We are interested in it. We are looking at the developments of that with its current shareholders -Xstrata in the main - but Highlands Pacific also has an 18% interest in that area so once the government has settled in and we start talking to the government, then I am sure that will become clearer to us as management as to what the State would like us to do in regards to that.
GARRETT: What would it take for Ok Tedi to be in a position to buy into Frieda River?
PARKER: It is simply the shareholder commitment to it. Our major shareholder PNGSD are very interested in it because of the benefits it would bring Papua New Guinea, particularly if Papua New Guinea's own mining and exploration company has a very large chunk of it. The state, with the new government of course, we'll have to assess the mood of the government as to whether they are committed to that, and if they are committed to that, then there is no reason why the Ok Tedi group can't become involved in that.
GARRETT: Ok Tedi is a crucial source of revenue for the PNG government.
In 2011, it received 496 million US dollars from Ok Tedi in taxes and levies and a further 64 million dollars in dividends.
The government has a clear interest in ensuring Ok Tedi's future but it will also need to consider the environmental impact of development at Frieda River.
Xstata is due to deliver its feasibility study on the Frieda River project next month.
Ok Tedi Managing Director, Nigel Parker, is keen to get on and make a bid.
I asked him when it might be feasible to act.
PARKER: We would like to think as soon as possible! But we are coming up towards Christmas, of course. We have a new government that is starting to settle in, heading towards budget process and has some other priorities, I would suspect.
GARETT: You mentioned that Frieda river is very similar to the situation of Ok Tedi. Frieda River is in the head waters of the Sepik River. Ok Tedi has had a catstrophic effect on the Fly River. How would you do things differently at Frieda River?
PARKER: You are absolutely correct. It is a pristine environment and in this day and age mining companies have to look totally different as to how they mine or exploit mineral resources. We are of the view that, with the gas resources here in the Western Province, we would first up generate power on this side and then transmit power through the Ok Tedi System and then up over the mountains so by using gas fired power, 160 odd megawatts, as opposed to damming pristine valleys and absorbing enormous areas, a la the Three Gorges dam in China, that would be our first view, that we would not look to interfere with the environment where we could use gas fired power. Then it gets down to whether it has to be open puit or whether we can go underground. I can't answer those questions at this point.
GARRETT: What about a tailings dam. That has been the big problem here. We have seen a mud river heading down towards the ocean at the mouth of the Fly River. What would you do a Frieda River?
PARKER: My understanding is that that is not the same issue on the Frieda River side, that off the mountain escarpments there is land down there that is well aligned to tailings dams and tailings treatment solutions.
GARRETT: Would you consider putting tailings into the river if the tailings dam didn't seem possible?
PARKER: I would suggest that the Board of OTML would be very sensitive towards that and, in fact, given the fact that the Sepik River is a pristine river that certainly would not be an option for us.
GARRETT: But you are not ruling it out?
PARKER: At this point, I could say to you that we would rule that out because in this day and age you can't move into this type of situation to put tailings and, in fact, in our own operation here we have an active project in play at the moment, looking at building a tailings dam, very close to the mine operations and we anticipate that within twelve months or so we will have a fairly good fix on whether we can actually do that now. Why we can do it as opposed to the BHP era is that, 30 odd years have moved on, engineering solutions have developed, tailings treatment solutions have developed. The Chinese have built the Three Gorges dam. They're putting highways under sedimentary flood plains so it's a totally different environment now

Sir Michael Bromley appointed chairman of Waratah Resources

Waratah Resources

African focused iron ore explorer, Waratah Resources Limited  is pleased to welcome Sir Michael Bromley to the position of Chairman and advise of the upcoming relocation of Waratah's head office to Sydney, New South Wales.
Sir Michael Bromley brings with him a wealth of international business experience built over 40 years of operating companies in numerous countries, including Singapore, Indonesia, Australia, Russia, China and Papua New Guinea (PNG).
 After graduating from school, Sir Michael joined Collins and Leahy, a public company trading in the Highlands of PNG and subsequently started his own company, Bromley and Manton, in 1973.
 Sir Michael sold Bromley and Manton to Collins and Leahy in 1983 and took the position of Managing Director until 2000.
Sir Michael was knighted for his services to commerce in Papua New Guinea.
 He has extensive corporate experience derived from residing on the board of numerous companies, including Heli Niugini Limited, Air Niugini, Orogen Minerals Limited, Steamship Trading Company Limited, Sek No: 35 Limited, Maps Tuna Limited, Chemica Ltd and Hoia Investments Ltd.
The Board values Sir Michael's vast experience in dealing at the highest levels of business and government, extensive knowledge in developing international projects and his exceptional reputation for integrity as paramount to Waratah's growth and progression towards becoming a large-scale iron ore producer.
Following the Board's decision to relocate the Company's head office to Sydney, Mr Terry Streeter and Mr Rod White have resigned from their respective roles of Chairman and Non-Executive Director of Waratah.
 As a major shareholder of the Company, Mr Streeter remains committed to supporting the continued development and future success of Waratah.
The Board thanks Mr Streeter and Mr White for their contributions to the corporate development of the Company during a difficult period in the financial market.
Waratah's head office will soon be relocated to Sydney, New South Wales. New head office details will be released before the end of Q4.

Royal visit sparks excitement in PNG

AAP

The Prince of Wales and the Duchess of Cornwall will be met with a 21-gun salute when they arrive in Papua New Guinea and the duchess will have a flower named in her honour.

Prince Charles and his wife, Camilla, will spend three days on the Pacific Island from November 3.
Events Minister Justin Tkatchenko on Thursday told journalists the royal pair would participate in an ecumenical service and cultural display at the Sir John Guise Stadium in the capital Port Moresby.
The couple will visit an orchid garden outside Port Moresby for a garden party where the Duchess of Cornwall will see a hybrid orchid named in her honour - the Dendrobium Camilla.
"I am proud to say it is in full flower and will be ready for her to have a look at and see if it looks like her at all," Mr Tkatchenko said.
"The most important thing is that this visit touches the hearts of everybody right across the board - from our politicians, to our ambassadors, to our grassroots people, to our business men and women," Mr Tkatchenko said.
"I would like to also appeal to all the public, all the citizens of Papua New Guinea, to join in this very special occasion at Sir John Guise Stadium. You are all welcome."
In other engagements, the prince will visit a youth centre and the duchess will meet mentors and women at a refuge centre in the city.
There will also be a state dinner.
It will be Prince Charles's first visit to the country in 28 years.
Upon arrival at Port Moresby's international airport, the royal pair will be greeted by 750 school children as well as a "sing sing", or traditional dancers and a 21-gun salute.
Should the royal entourage peer out of their car windows, they'll see rows of British and PNG flags lining the highway, as well as banners celebrating Queen Elizabeth II's Diamond Jubilee.
At a roundabout near the airport, a huge sign declares Prime Minister Peter O'Neill welcomes them to the country.
The country's capital has been in roadworks overdrive for the past month to repair some of the city's notoriously pot-holed streets in preparation for the visit at a cost of $A4.8 million.
Mr Tkatchenko said the projects had been fast-tracked for the visit.
Prince Charles, who is also colonel-in-chief of the Royal Pacific Islands Regiment, will present the infantry unit with new colours, Colonel Michael Daniels told reporters.
Mr Tkatchenko said the visit would be an opportunity to correct misconceptions about Papua New Guinea to an international audience.
"From the reports I initially got from London was that we're still cannibals," he said, referring to an article in the UK's Daily Star tabloid alleging travellers were too scared to come to PNG for fear of getting eaten.
"This is a scenario where we don't want to hear anymore of that bulls***, as far as I'm concerned.
"We need to change the attitudes and ways and open their eyes to show how good we are."

NGE gets PNG licence extensions

Papua New Guinea: NGE has received a five year extension for two onshore licences

DREW DOUGLAS

 

By JOSH LEWIS in Upstream

 

Australia-listed New Guinea Energy (NGE) received extensions for the exploration periods of two licences in Papua New Guinea.

The company confirmed on Thursday that Papua New Guinea’s Minister of Petroleum & Energy had granted a five year extension to the licence periods and exploration expenditure programmes for PPL 266 and 267.
“Gaining confirmation that NGE have the rights for the next five years to continue exploration in these prospective licences is tremendously helpful and fundamental in providing the certainty to potential farm-in partners,” NGE chief executive Grant Worner said.
NGE said the tenure on the licences, in which it holds a 100% interest, expired in August last year, while its other two wholly-owned PNG licences, PPL 265 and PPL  277, are due to expire at the end of November this year.
It noted that it had lodged applications with the PNG Department of Petroleum & Energy “well in advance” of the expiration date

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.