Barrick Gold Corp. [TSX-ABX, NYSE-GOLD] said the Porgera mine in Papua New Guinea is set to resume operations later this month and is expected to start pouring gold again in the first quarter of 2024.
This announcement follows the satisfaction of the conditions to the Porgera Project Commencement Agreement, in which a new ownership structure was agreed.
Barrick President and CEO Mark Bristow said the reopening of the mine represented another victory for the company’s host-country partnership model which had been very successful in Tanzania and had also been adopted for its new Reko Diq copper gold project in Pakistan.China.
“It’s been a long journey but in the process we have secured the buy-in of all the stakeholders and we look forward to steering the mine back to world-class production,’’ he said. “It undoubtedly has the potential to join our Tier One gold mine portfolio, the largest of its kind in the industry,’’ he said.
A Tier One gold asset is defined as an asset with a US$1,300/oz reserve potential to deliver a minimum of 10-year life, annual production of at least 500,000 ounces of gold and with all-in sustaining costs per ounce in the lower half of the industry cost curve.
The equity in New Pogera is shared 51% by PNG stakeholders, including local landowners and the Enga provincial government, and 49% by Barrick Niugini (BNL), a joint venture between Barric and Zijin of China. BNL will operate the mine. The PNG shareholders will receive 53% of Porgera’s overall economic benefits. At an assumed gold price of US$1,800 per ounce, this is expected to amount to more than US$7 billion over the mine’s projected 20-year life.
Speaking at the PNG Resources & Energy Investment Conference in Sydney, Australia, PNG Prime Minister James Marape hailed the revival of a major contributor to the country’s economy. The partnership structure gives PNG stakeholders a majority interest in a key resource for the first time.
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.
On Monday, Barrick Gold shares eased 1.7% or 38 cents to $22.45 on volume of 287,790. The shares trade in a 52-week range of $28.19 and $19.04.