Barrick Gold moves step closer to Porgera restart

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Barrick Gold Corp. [ABX-TSX; GOLD-NYSE] said Friday June 4 that the process of reopening the Porgera gold mine in Papua New Guinea under the terms of a binding agreement between the government and operator Barrick (Niugini) Ltd. (BNL) has taken a major step forward.

Barrick President and CEO Mark Bristow said production at the mine may restart later this year.

The gold mining giant said optimism stems from discussions between Bristow, PNG Prime Minister James Marape and various Porgera landowner groups and others.

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 kilometres north-west 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.

However, in April, 2020, Marape refused to extend the expired 20-year mining lease of operator 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.

Prior to the PNG government’s refusal to extend the mining license, Barrick and Chinese partner Zijin Mining Group each owned 47.5% of the Porgera mine.

The remaining 5% interest was held by Mineral Resources Enga (owned jointly by Porgera Special Mining Lease landowners and the Enga Provincial Government).

Under a new framework agreement, Porgera will be owned by a new joint venture held 51% by Papua New Guinea (PNG) stakeholders and 49% by BNL, with BNL continuing as the operator. The framework agreement also calls on the Porgera Landowners and the Enga Province to have a dialogue to determine how the 10% ‘protected equity’ which forms part of PNG’s 51% interest will be allocated.

Speaking at an event, which was attended by Marape, other government officials, Bristow said the agreement made each of the parties – the landowners, the national government, the province and BNL – a committed stakeholder, responsible for the long-term success of the mine.

“In aligning our interests, it recognizes the importance of the landowners and the communities, and prioritizes the benefits they will receive, not only from the mine but from a new Porgera Development Fund that will invest tens of millions of Kina in promising local projects,’’ Bristow said.

“In addition, BNL is committed to giving preference to competitive local contractors and suppliers and to employing Porgerans first. With BNL as operator, Porgera will also redouble its efforts to be a responsible steward of the environment,” he said.

Bristow went on to say that the “road to reopening is a long one,” but added that if all parties work together it is hoped that the mine could restart later this year.

On Friday, Barrick shares rose 1.1% or 30 cents to $28.37 on volume of 1.31 million. The shares trade in a 52=week range of $41.09 and $23.63.

 

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