Australia's Newcrest braces shareholders for up to A$2.5b impairment

Sydney (Reuters) -  Australia's Newcrest Mining Ltd on Thursday braced shareholders for up to A$2.5 billion in fiscal 2014 after-tax impairments as it struggles to lower mining costs while bullion prices show little sign of rising.
The latest charge is in addition to a A$47 million impairment included in Newcrest's first-half results.
These follow A$6.229 billion in impairments and writedowns the Australian bourse's largest-listed gold miner took in fiscal 2013, leading to a A$5.78 billion loss for the year.
Newcrest stock fell 6 percent on Thursday to A$10.73, 14 percent below its 2014 peak of $12.50 in early April
UBS maintained its "sell" rating on the stock despite higher-than expected gold production of 2.4 million ounces in fiscal 2014, also reported by the company on Thursday.
"We believe it is the simple function of size and liquidity that keeps Newcrest Mining as the 'go-to' gold stock in Australia for many investors and not a function of asset portfolio quality," UBS said in a client note.
Managing Director Sandeep Biswas said a final decision was yet to be made but the impairment was likely be between A$1.5 billion and $2.5 billion.
Depending on the size, the impairment will lift Newcrest's net debt by between three and six percent from roughly 29 percent now, he said.
The impairment will not impact cash flow for the miner, though a reduction in book values of between A$1.5 billion to A$2.5 billion was under review by the company's board, Biswas said.
Newcrest's Lihir gold mine, located in a long-dormant volcano in Papua New Guinea, faces the biggest deterrent to a turn around for the company despite billions of dollars in capital outlays over the last several years, Biswas said.
"Lihir's cost perfomance was disappointing relative to the improvements made at our other sites," Biswas said.
The need for fresh charges -- also related to performance at mines in Western Australiaand Ivory Coast -- were unlikely to trigger any asset sales to raise cash, Biswas said.
"The first order of business is to see the value of these assets in our stock price," Biswas said.
Nor would the company turn to an equity raising for fresh capital, according to Biswas.
"Our focus is to get our all-in sustaining costs down such that the more margin you have compared to the gold price, the more buffer you have in times of price volatility," Biswas said. "And of course you make more money when the price goes up."
Biswas said Newcrest sold its gold for an average A$1,382 ($1,300) an ounce in the final quarter, providing a margin of A$469 ($440) an ounce.
Australia & New Zealand Bank is forecasting an average gold price of $1,220 an ounce over the current quarter, equating to A$1,151 based on the current foreign exchange rate. ($1=1.0597 Australian Dollars) (Reporting by James Regan; Editing by Richard Pullin)

Wednesday July 23 is Remembrance day in Papua New Guinea

Wedneday July 23  is a public holiday in Papua New Guinea and marks the 72nd anniversary of the first engagement by PNG and Australian forces against the invading Japanese in WWII.
Out of the chaos and death that followed came the enduring heroism of the Kokoda Trail, and the special relationship that has bound PNG and Australia ever since.
One of the bloodiest campaigns of the Second World War began 72 years ago.
And it has forever sealed the relationship between Australia and Papua New Guinea.
It was on this day, in 1942, that Japanese troops landed on the northern coast of New Guinea and unexpectedly began to march over the Owen Stanley Ranges with the intent of capturing Port Moresby.
Had they succeeded, the mainland of Australia would have come under dire threat.
July 23 - Remembrance Day - marks the 72nd anniversary of the first engagement between the opposing troops on July 23, 1942, and from that engagement, as the Australian force was progressively outnumbered, began the long fighting withdrawal over the Owen Stanley Range.
The 21st Brigade, commanded by Brigadier Potts DSO MC, was rushed to New Guinea and within days, its 1500 men were closing in on the precarious Owen Stanley Ranges in an attempt to position themselves to stop the advance of the Japanese forces - now building up to over 10, 000 men.
The brigade also engaged the ill-trained but gallant militia 39th Battalion at Isurava in the foothills on the far side of the range.
Kokoda was arguably Australia's most significant campaign of the Second World War.
More Australians died in the seven months of fighting in Papua, and the Japanese came closer to Australia, than in any other campaign.
Many of those young Australians, whose average age was between 18 and 19, now lie buried at the Bomana War Cemetery outside Port Moresby.
The famous photograph of "fuzzy wuzzy angel" Raphael Oimbari leading a blindfolded wounded Australian epitomizes the close relationship between Australians and Papua New Guineans which has come about because of the battle of Kokoda.
To read between the lines of "Fuzzy Wuzzy Angels", the celebrated poem by Australian digger Bert Beros, will bring you to tears.
The poem, while sentimental, touches a chord that has endured to this day in the hearts of both Australians and Papua New Guineans.
It tells of the prayers of worried Australian mothers, whose young sons are fighting the Japanese on that rugged trail, and how their prayers are answered in the form of "fuzzy wuzzy angels".

Many a mother in Australia when the busy day is done
Sends a prayer to the Almighty for the keeping of her son
Asking that an angel guide him and bring him safely back
Now we see those prayers are answered on the Owen Stanley Track.

For they haven't any halos, only holes slashed in their ears
And their faces worked by tattoos with scratch pins in their hair
Bringing back the badly wounded just as steady as a horse
Using leaves to keep the rain off and as gentle as a nurse

Slow and careful in the bad places on the awful mountain track
The look upon their faces would make you think Christ was black
Not a move to hurt the wounded as they treat him like a saint
It's a picture worth recording that an artist's yet to paint

Many a lad will see his mother and husbands see their wives
Just because the fuzzy wuzzy carried them to save their lives
From mortar bombs and machine gun fire or chance surprise attacks
To the safety and the care of doctors at the bottom of the track

May the mothers of Australia when they offer up a prayer
Mention those impromptu angels with their fuzzy wuzzy hair.

- Bert Beros

In 1942, a seldom-used track climbed from the small village of Buna on the north coast of Papua, over the Owen Stanley Ranges and on to Port Moresby.
The track was fairly easy up the slopes through Gorari and Oivi to the village of Kokoda, which stood on a small plateau 400 metres above sea level, flanked by mountains rising to over 2000 metres.
It then climbed over steep ridges and through deep valleys to Deniki, Isurava, Kagi, Ioribaiwa, Ilolo and, at Ower's Corner, linked with a vehicle road leading from plantations in the hills above Port Moresby down to the coastal plains.
Between Kokoda and Ilolo, the track often climbed up gradients so steep that it was heartbreaking labor for burdened men to climb even a few hundred yards.
Much of the track was through dense rainforest, which enclosed the narrow passage between walls of thick bush.
At higher levels the terrain became moss and stunted trees, which were often covered in mist.
From July to November 1942 this was the setting for a bitter campaign to prevent the fall of Port Moresby.
On January 23, 1942, the Japanese landed at Kavieng on New Ireland and at Rabaul on New Britain where they quickly overcame the Australian defenders.
On March 8, the Japanese established themselves firmly at Lae and Salamaua in Morobe.
But the famous Battle of the Coral Sea from May 5 to 8 averted a Japanese sea-borne invasion of Port Moresby.
The American success at the Battle of Midway in June not only destroyed Japan's capacity for undertaking long range offensives but also provided the Americans with the opportunity to move from the defensive to the offensive.
The Japanese, who were regularly bombing Port Moresby with 20 to 30 bombers with fighter escort, decided on the overland attack across the Owen Stanley Ranges.
On the Kododa Trail the Australian 7th Division resisted the Japanese General Horii's overland attempt to capture Port Moresby, and the advance was halted within 30 miles of the city.
A small force of Australians known as "Maroubra Force" arrived at Buna on July 21st, 1942, as the first Japanese force of 1500 men landed at Gona, eight miles to the west.
What followed will forever go down as one of the most heroic defensive actions in the annals of military history.
The first engagement between the opposing troops was on July 23, 1942, and from that engagement, as the Australian force was progressively outnumbered, began the long fighting withdrawal over the Owen Stanley Range.
Kokoda is a small plateau on the north-east slopes of the Owen Stanley Range and possessed a small airstrip the retention of which, for at least as long as it would take Australia to fly in supplies and reinforcements, was of great importance.
However, the remnants of "Maroubra Force", exhausted by a month's constant fighting, were unable to achieve this. Valiant though their effort was, even recapturing the plateau after being driven out, the Japanese need was of equal importance.
They needed a forward base at Kokoda for their drive over the ranges along the "Kokoda Trail" to Port Moresby and they struck before the Australians were able to muster sufficient strength.
The initiative now remained with the Japanese and Australian withdrawal began again - through Isurava, Alola, Templeton's Crossing, Myola, Efogi, Menari and Nauro until at Ioribaiwa Ridge, beyond which the Japanese could not be permitted to penetrate, a final stand was made.
From August 26 to September 16 in 1942 Brigadier Potts's Maroubra Force, consisting of the 2/16th Battalion, together with the 2/14th, the 2/27th and the militia 39th and scattered elements of the ill-trained 53rd Battalion - outnumbered and outgunned by an estimated 5 to 1 - fought the Japanese to an eventual standstill on the ridges overlooking Port Moresby.
Two main battles were fought during that period (Isurava, August 26 to 29 and Brigade 'Butchers' Hill, from September 6 to 8).
In general, the desperately-tired but determined force kept themselves between the Japanese Major General Horri's South Sea Force and Port Moresby -- defending, retreating and then counter-attacking in a masterly display of strategic defence.
Conditions were almost indescribable.
It rained for most of the time, the weary men endured some of the most difficult terrain in the world and they were racked by malaria and dysentery.
But they kept on fighting, making the enemy pay dearly for every yard of ground. They bought time for those being prepared to come up from Port Moresby to relieve them.
The Australians, however, had a surprise in store for the enemy.
This was in the form of 25-pounder guns brought from Moresby to the road head at Ower's Corner and then laboriously dragged into position at Imita Ridge, opening up on the enemy's barricades.
It was now the turn of the Japanese to suffer what the Australians had suffered in the preceding two months.
Australian shelling smashed Japanese defences and aggressive patrols inflicted severe losses.
On the morning of September 28th, the Australians were closing in and it became evident then the Japanese were withdrawing.
The chase, with the Australians the pursuers, was now on.
The Japanese, despite sickness and hunger, were still formidable and tenaciously defended all the places in their withdrawal as the Australians had in their retreat some weeks earlier.
Kokoda was entered on November 2 and this was the beginning of the end of Japanese hopes in Papua.
The campaign now entered a phase known as "The Battle of the Beaches".
The Japanese were bottled up in the area from where they had begun their drive against Port Moresby some months previously -- Buna and Gona.
This final campaign began on November 19, 1942, and ended on January 22, 1943, when all organised resistance by the Japanese in Papua ended.
Lt Col Honner DSO MC, who commanded the gallant 39th in the campaign, later wrote of these men in the foreword to Peter Brune's book 'Those Rugged Bloody Heroes': "They have joined the immortals." Of those that did not survive, he wrote: "Wherever their bones may lie, the courage of heroes is consecrated in the hearts and engraved in the history of the free."

351 days to go

351 days to go before the Pacific Games on July 4, 2015: I don't know what our visitors will think of all the plastic, flotsam and jetsam among the mangroves along the back road from Kanudi onwards,

At least that's what I thought while taking a drive along the back road yesterday. 
The poor mangroves are being choked by the trash of humanity in Port Moresby!

PNG fraud squad arrest police commissioner's lawyer Sam Bonner

ABC

A lawyer representing Papua New Guinea's new police commissioner has been interviewed by fraud squad officers on suspicion of misappropriation.

PNG's Police Commissioner Geoffrey Vaki says the case against Prime Minister Peter O'Neill requires more investigation. (Credit: ABC)

The fraud squad in Papua New Guinea has arrested a lawyer acting for the country's police commissioner, accusing him of stealing and money laundering.
Sam Bonner was arrested outside the National Court House in Port Moresby by police investigating corruption allegations against Prime Minister Peter O'Neill.
Mr Bonner has been assisting newly-appointed Police Commissioner Geoffrey Vaki in his attempt to set aside arrest warrants for the premier.

Audio: Another arrest in PNG corruption saga (ABC News)

 

Mr O'Neill was issued with an arrest warrant in June after the country's anti-corruption agency Taskforce Sweep accused him of authorising fraudulent government payments to law firm Paraka Lawyers.
PNG correspondent Liam Cochrane says the fraud squad interviewed Mr Bonner to try to lay charges of stealing, conspiracy to defraud and money laundering.
"The fraud squad are alleging that Mr Bonner is involved in the Paraka legal corruption scandal, saying he was a conduit for money that was improperly gained," he said.
"The way [his arrest] took place was rather dramatic.
"There was an attempt to arrest Mr Bonner, he resisted and the fraud squad officers used force and physically detained him.
"There was quite a scuffle. I think he was injured slightly and perhaps some of the police officers were also injured."
Mr O'Neill, who created Task Force Sweep in 2011 to investigate the Paraka case, dismantled the watchdog last month after being served with an arrest warrant for corruption.
The arrest warrant has been deemed valid by the National Court, but Police Commissioner Vaki - recently appointed by Mr O'Neill in the wake of the corruption scandal - has said he will not be arresting the prime minister.
Liam Cochrane says fraud squad officers who arrested Mr Bonner on Wednesday are operating on their own terms and not in line with the instructions of Mr Vaki.
"This is concrete evidence of that fractionalisation within the police which is broadly those who are in favour of going after the prime minister's arrest warrants... squaring off against those who have aligned themselves with the new Police Commissioner Vaki, who are more interested in protecting the prime minister."

Papua New Guinea: Many women abused, few dare to speak up

By Mathias Eick

European Commission

New Years’ Eve 2014 was not a cause for celebration for Mona, a 22 year-old villager from northern Papua New Guinea. Her farther who suffers from alcohol addiction repeatedly assaulted her sexually and violently. Fearing for her life she ran to her aunt in a neighbouring village. Fortunately for Mona, her aunt had heard of a new facility, the Family Support Centre (FSC), at the local hospital in nearest town Maprik, where Mona was able to get proper treatment.
 
Six months after the terrible incident, I met Mona at the FSC in Maprik, run by Médecins Sans Frontières (MSF) Holland. This quiet young woman was brutally honest about her experience. Although her physical scars had healed well, she was still too afraid to return to her home village, fearing further attacks by her father. “Men get drunk and then they beat women or children,” she explains. “They just think that because they are men they can do anything they want.”
Indeed, Mona is not alone in her fears and experiences. MSF confirms a horrifyingly wide spread of sexual and gender-based Violence. According to a recent UN study, one in five women’s first experience of sex was rape, 30% of men had experienced sexual abuse as children and 12% had been forced into sex as a child. MSF, nurses and doctors have treated more than 18,000 victims of sexual and gender-based Violence since December 2007.
These figures become stark reality when interviewing young brave women like Mona who are willing to speak of their ordeal. But even during the interview there was a sudden commotion in the FSC. The nurses rushed to the entrance as a woman stumbled in the clinic, her shirt blood-soaked from a bad wound to her head. Quickly the nurses treated her physical wounds. The victim explained that her husband hit her with a rock at the market in an alcohol-fueled rage.
The FSC acts as a “one-stop” service centre for victims of such violence, able to immediately provide medical first aid, preventive measures against sexually transmitted diseases (STDs) like HIV, emergency contraception and psycho-social assistance. The FSC have been so successful that the National Department of Health – in close collaboration with the World Health Organisation (WHO), MSF and other partners – decided to provide intensive attachment training on how to set-up and run much-needed medical emergency services for survivors.
This crisis in Papua New Guinea is hardly noticed outside the country. The European Commission's Humanitarian Aid and Civil Protection department (ECHO) decided to support MSF-Holland in establishing Family Support Centres in 2014 with a grant of € 1.5 million. “The funds are being used to support local medical staff and institutions on how to treat victims of sexual- and gender-based violence and run these centres efficiently” MSF’s Elisa Galli explains. “This will help guarantee that the service will continue once we hand over to the local authorities.”
Much progress has been made not only in trying to treat the victims of this violence but also in addressing its causes. This includes a stringent Family Protection law, passed by the Papua New Guinean government in September 2013. Furthermore, country-wide information campaigns are trying to influence men’s attitudes and behaviours. Not soon enough for the thousands of women such as Mona who live in fear…

Mathias Eick, Regional Information Officer, South-east Asia and the Pacific, European Commission Humanitarian Aid and Civil Protection deparment (ECHO)

Japan's Prime Minister visits Papua New Guinea

By Will Morrow

Japanese Prime Minister Shinzo Abe’s spent two full days in the resource-rich South Pacific nation of Papua New Guinea (PNG) last Friday and Saturday, underscoring the geo-strategic ambitions behind his government’s decision to “re-interpret” Japan’s constitution to enable the country’s armed forces to engage in overseas military operations.

Abe was accompanied by a business delegation of more than 150 people on the first visit by a Japanese PM to the small country in three decades. Abe’s tour, which also included New Zealand and Australia, came days after his announcement of a constitutional “reinterpretation” aimed at removing any obstacle to the re-emergence of Japanese militarism. A major component of that strategy means securing energy supplies.
Japan was the first buyer from ExxonMobil’s just-completed $US19 billion liquefied natural gas project in PNG, which is expected to produce 255 billion cubic metres of LNG over the next 30 years. Abe told the Port Moresby Post-Courier before his visit that “the government of Japan regards the LNG development project as one of the priority areas of our bilateral cooperation.”
Another major Japanese business interest in PNG is a plan by Mitsubishi Corporation and Itochu to develop a $1 billion petrochemical plant. According to the Australian, the Japanese business delegation accompanying Abe included the chairman of JX Holdings, the parent company of Nippon Oil, which owns 4.7 percent of PNG LNG. In addition to a $197 million pledge of government aid, Japan is offering PNG low-interest loans from the Japan Oil, Gas and Metals National Corporation.
As the Australian noted, the prospect of ongoing LNG imports from PNG “holds special appeal for Japan, since 60 percent of its gas imports presently have to traverse the increasingly disputed South China Sea.” The South China Sea has been the stage of increasingly tense territorial disputes, fomented by the United States, between China and the Philippines and Vietnam.
While China was not publicly mentioned during Abe’s PNG visit, commentators said the trip sent a message to Beijing. “This visit is a big signal to the region, and also to China, that Japan still has a stake in the region,” Jenny Hayward-Jones, director of the Myer Melanesia Program at Australia’s Lowy Institute, told the Australian Broadcasting Corporation. “Its trade and investment interests are strong, and it has a political interest if its prime minister is prepared to spend two days in PNG and bring a huge delegation with him.”
Abe declared Japan’s “determination to even more actively contribute to ensuring peace, stability and prosperity in the international community, including the Pacific regions.” Washington has used similar words to justify its “pivot to Asia”—a systematic military, diplomatic and economic build-up aimed against China.
Well aware of the deep antiwar sentiment and opposition to the constitutional reinterpretation in the Japanese working class, Abe also sought to use the PNG visit as a platform to promote patriotism and reverence for Japanese soldiers killed in World War II.
Abe conducted a stage-managed trip to Wewak, where he visited the Brandi battlefield and a war memorial for Japanese troops. PNG, where about 200,000 Japanese soldiers died, was the scene of some of the most terrible fighting of World War II.
Abe vowed never to “repeat the horrors of war,” telling reporters: “I pledged in front of the spirits of the war dead that Japan wants to be a country that thinks about world peace with its friends in Asia and around the world.” Yet, he clearly glorified the military campaigns of World War II. According to the Japanese public broadcaster NHK World, Abe said Japan’s present-day prosperity was based on the troops who sacrificed their lives.
Abe also visited Cape Wom, the site of the Japanese army’s surrender in PNG, and reportedly secured an agreement with PNG Prime Minister Peter O’Neill for the return of soldiers’ remains to Japan. This will lay the basis for a series of militarist reburial ceremonies, designed to overcome popular hostility to preparations for another war.
Abe’s comments are in line with his administration’s efforts to whitewash the crimes of Japanese imperialism, including the Japanese army’s use of sex slaves, or “comfort women,” during World War II, and the Nanking Massacre of 1937, in which up to 300,000 Chinese civilians and soldiers were killed.
Because of its energy and mineral resources, and strategic location, PNG, a longtime Australian colony, is being drawn into the firing line of the mounting tensions between the US, China and Japan.
The strategic significance of the ExxonMobil LNP plant was highlighted in 2011, when then-US Secretary of State Hilary Clinton accused China of seeking to undermine the US grip over the project. She told the Senate Foreign Relations Committee that the project was an example of the competition underway between China and the US.
Referring to the gas supplies at stake, she asserted: “ExxonMobil is producing it. China is in there every day, in every way, trying to figure out how its going to come in behind us, come in under us.” She declared it would be “mistaken” to think the US would retreat from “the maintenance of our leadership in a world where we are competing with China.”
So far, Washington has encouraged the unshackling of Japanese militarism, as part of its build-up against China. But US and Japanese imperialism fought for control over PNG, and the entire Asia-Pacific region, in the last world war. The re-emergence of Japanese militarism and its quest to secure access to energy and other critical resources once again poses the question of which imperialist power will dominate the region and, in particular, subjugate China.

Exxon partner is confident about LNG project in Papua New Guinea

Australia's Oil Search says expansion is probably warranted

By Ross Kelly
Wall Street Journal

SYDNEY—A partner in Exxon Mobil Corp.'s XOM +0.92% Papua New Guinea natural-gas project said it is confident that enough new gas will be found in the country to justify a significant expansion of the project's processing facilities.
Exxon's biggest partner in the project, Australia's Oil Search Ltd. OSH.AU +0.63% , said sufficient natural gas probably exists in the country's highlands to warrant adding at least one refrigeration unit, known as a train, to chill natural gas into liquid so it can be exported to fast-growing markets in Asia.
Any major boost to the liquefied natural gas produced in Papua New Guinea promises to be a vital new source of profit for Exxon, which is attempting to arrest three years of falling production.
Expansion also would prove a windfall for Papua New Guinea's developing economy.
"By the end of the year, I think we'll have a pretty good idea as to the size and shape of the Hides field" in the highlands, said Oil Search Chief Executive Peter Botten.
A large increase in the amount of LNG pumped into Asia would make the gas market more competitive by creating a new source of supply for buyers in places such as Japan, South Korea and China.
The US$19 billion Papua New Guinea project began exporting chilled natural gas in May, putting the impoverished nation into the global energy market about three months ahead of schedule. The project's two existing trains are capable of producing 6.9 million metric tons of LNG a year, equivalent to about 8% of Japan's total LNG intake last year.
Exxon's oil and gas production has fallen since 2010 as the industry generally has struggled to find big deposits in countries that aren't hostile to foreign investment. The Papua New Guinea development is a key part of Exxon's efforts, along with exploration in Asia and projects in Canada and Russia, to improve performance.
The prospect of adding new refrigeration units to LNG projects is appealing to producers because costly infrastructure, such as pipelines, roads and storage tanks, has already been installed. Expanding processing is therefore a relatively inexpensive way to boost production.
Still, expanding the project would bring more LNG into the market, potentially driving down prices for producers such as Exxon, Chevron Corp. CVX +0.61% and Royal Dutch Shell RDSA.LN +0.73% PLC. Supplies in Asia are already expected to rise substantially in the coming years as a result of the U.S. shale-gas boom.
Papua New Guinea operators have an advantage over LNG developers in places such as Australia, where labor is more expensive. Buyers are also eager to diversify their supply sources to protect against the possible disruptions.
John Hirjee, an analyst at Deutsche Bank, estimated that Exxon's plant in Papua New Guinea will generate a return on investment of 19% over its life, potentially making the project one of the most lucrative in the Asian-Pacific region.
For Oil Search, which recently began exploring for oil in Iraqi Kurdistan, adding a third processing unit could be a quick way to increase earnings as investors question how it will maintain sharp gains in its stock price. The company's shares have almost doubled in price in the five years since construction on the LNG project began.
For Papua New Guinea's government, a decision to invest in new processing facilities would inject much-needed cash into the economy. Spending on the foundation stage of the project is already set to more than double the country's gross domestic product, according to some estimates.
Large investments in the country have led to quarreling between tribal landowners and lawmakers over how the proceeds should be divided.
Oil Search's Mr. Botten, a longtime resident of the country, said he was optimistic that rewards from the project would be distributed equitably. "The government has made the right moves in terms of setting up sovereign-wealth funds and various mechanisms for benefits distribution, but it's early days," he said. "Part of the solution is that the private sector works with government to help deliver services like health."
The country's high proportion of people with AIDS—as much as 0.7% of the nation's adult population, according to some estimates—is of particular concern.
Write to Ross Kelly at ross.kelly@wsj.com