Barrick Gold comments on “imminent” Porgera mine reopening

Barrick Gold Corp. [ABX-TSX; GOLD-NYSE] said Monday April 5 that it has noted the statement by Papua New Guinea Prime Minister James Marape announcing an imminent agreement to reopen the Porgera gold mine.

Barrick and the government of Papua New Guinea have continued to hold constructive discussions on a framework agreement for the recommissioning of Porgera, which has been on care and maintenance since April, 2020.

The Porgera Joint Venture is an open pit and underground gold mine located at an altitude of 2,200-2,600 metres in the Enga Province of Papua New Guinea, about 600 km northwest of Port Moresby. Proven and probable reserves at the site stand at 2.3 million ounces, with a further 3.6 million ounces and 1.2 million ounces listed in the measured and indicated, and inferred categories, respectively.

In 2019, Porgera produced 284,000 ounces of gold at an all-in-sustaining cost of US$1,003 an ounce.

Barrick and Chinese partner Zijin Mining Group each own 47.5% of the Porgera mine. The remaining 5% interest is held by Mineral Resources Enga (owned jointly by Porgera Special Mining Lease landowners and the Enga Provincial Government).

Back in April, 2020, Marape refused to extend the expired 20-year mining lease of operator Barrick (Niugini) Ltd. (BNL), citing environmental and social problems. BNL responded by vowing to challenge the purported grant of a special mining lease for the Porgera gold mine to a government-owned company.

It said the move by the Marape Government to purportedly grant a special mining lease to Kumul Minerals Holdings Ltd., a wholly state-owned enterprise, was tantamount to nationalization without due process.

On Monday, Barrick said the agreement under discussion is in line with the principles announced in October, 2020, providing for a joint venture between Barrick (Niugini) Ltd. (BNL) and the government of Papua New Guinea to operate Porgera going forward on the basis of increased Papua New Guinea ownership and a fair sharing of economic benefits.

BNL would continue as operator of the mine, Barrick said.

Meanwhile, the company said it remains hopeful that an agreement will be reached with the Papua New Guinea government on a long-term partnership that will see the reopening in the near future.

Barrick shares advanced on the news, rising 1.4% or $0.36 to $25.93 on volume of 1.7 million. The shares are currently trading in a 52-week range of $41.09 and $23.63.