The Papua New Guinea (PNG) Chamber of Mines & Petroleum held its biannual Mining & Petroleum Seminars in Port Moresby from October 27–30,
attracting record attendance of more than 300 participants.
[Editor’s note: Frequent E&MJ contributor Magnus Ericsson, president and co-founder of Stockholm, Sweden-based Raw Materials Group, recently provided this exclusive report on the current status of mining and exploration activity in Papua New Guinea.]
It seems apparent from the attendance figure and overall mood of the delegates that a resurgence in demand for mineral commodities since the start of this year has provided a solid foundation for PNG’s exploration and development projects. Although some junior companies have found the going tough, especially when it comes to obtaining funding, overall mineral-sector activity has proved to be resilient, with significant progress at all of the major projects.
At the latest count, more than 260 exploration licenses are now in force, with 20 more under renewal and more than 100 new license applications being processed. Gold remains the principal commodity of interest, with copper, nickel, iron and seabed massive sulphide deposits also being targeted.
Hidden Valley, Ramu Become Producers
With the first gold pour achieved in June, construction at the Morobe Mining joint venture’s Hidden Valley operation in Morobe province was scheduled for completion during September. The first new gold mine to be commissioned on mainland PNG in 15 years, Hidden Valley is engineered for a throughput of 4.2 million metric tons per year (mt/y) of ore from the Hamata, Hidden Valley and Kaveroi orebodies, with peak annual gold production scheduled at 275,000 oz/y in 2019.
Waste stripping having begun in 2007, by the middle of this year some 800,000 mt of ore had been stockpiled to await commissioning of the mill, with the joint venture partners, Harmony Gold Mining and Newcrest Mining, having already begun studies on optimizing the plant’s throughput and increasing production.
Meanwhile, spending for the Ramu nickel-cobalt laterite project in Madang province had reached $930 million by mid-year, out of a total capex cost of nearly $1.4 billion. Completion of construction and commissioning are scheduled for the end of this year, with production targeted at 31,150 mt/y of nickel and 3,300 mt/y of cobalt over an initial 20-year life. Construction of the key component of the project, the 135-km-long slurry pipeline from the Kurumbukari mine to the processing plant on the coast at Basamuk, was virtually complete several months ago, with all of the major plant components delivered.
Major Miners Expand Resources
Not only are these new projects nearing completion, but some of the country’s existing mines are at various stages of expansion or life-extension studies. Lihir Gold, for example, is currently working on a “Million Ounce Plant Upgrade” project; while at Porgera, Barrick Gold is exploring both around the existing operation and at depth to identify resources that could extend the mine’s current 13-year remaining life.
The Lihir Gold project aims to increase the mine’s output to around 1 million oz/y from 2012 for the remainder of its life, the operation having produced 771,000 oz last year and more than 7 million oz since it came on-stream in 1997. Successful exploration during the first half of this year has increased measured and indicated resources at Lihir from 33 million oz to 43 million oz.
Barrick reported success in increasing resources underground at Porgera during 2008, with its 2009 exploration efforts following upon the 2008 results. Current reserves are sufficient to support mining both on surface and underground until 2017. The company is also continuing with its Porgera Deeps program, exploring the intersections of Miners emerge from a drainage tunnel at the Ok Tedi mine in Papua New Guinea. With open-pit closure scheduled for 2013 at Ok Tedi, efforts are under way to find additional resources nearby. A pre-feasibility study on moving to underground mining began last year, with a feasibility study scheduled for completion in 2010.
Gold Resources Keep on Growing
Aside from focusing on their Hidden Valley project, Harmony and Newcrest have been working on a number of exploration sites. At Wafi-Golpu, the joint venture has compiled an integrated geological model, and has outlined a mining method for the Golpu porphyry. Other prospects currently under evaluation include Kesiago (copper-gold), Apu Creek (base metals and silver), Yafo and Biamena (both gold), all of which have been drilled recently.
On Woodlark Island, Woodlark Mining is reported to have identified a 1-million-oz-plus resource at its namesake project, with additional drilling having been carried out in order to improve the resource estimate. Further drilling and scoping studies are under way this year.
Allied Gold commissioned its mine on Simberi Island in February 2008, with the operation having produced 100,000 oz of gold by mid-2009. The company has also been able to increase its total resource there to 4.7 million oz of gold and 10 million oz of silver, including 1.4 million oz of oxide resources and 3.3 million oz of sulphide resources. Exploration is continuing at both the Sorowar and Pigiput prospects, with Allied having begun plant optimization studies aimed at a consistent 100,000-oz/y output from the operation.
Elsewhere, Barrick Gold has started work on its earn-in commitments at Allied’s copper and gold prospects on Tatau and Big Tabar islands. Following on from initial fieldwork and an airborne EM survey over the Tabar Island group, Barrick’s targets here have included Tupinda, Banasa and Kupo. The company also spent $10 million on exploration at its own Kainantu property in the Eastern Highlands during 2008, plus a further $27 million on mine development.
Other Metals Draw Attention
Although gold and copper have formed the foundation for PNG’s mining industry in the past, the country’s mineral endowment is far more extensive. The prospect of diversification has led a number of companies to begin evaluating a range of other mineral resources, including chromite, nickel, platinum-group metals and industrial minerals.
At Wowo Gap in eastern PNG, Resource Mining Corp. (through Niugini Nickel) is continuing to evaluate laterite nickel-cobalt resources, having recently completed a revised resource estimate for the project. Following the completion of a scoping study in 2008, the company is now carrying out further metallurgical testwork to determine the most appropriate treatment process for the mineralization, with a feasibility study scheduled for completion by the end of this year.
Chromite has been the target for OM Holdings, with the company having completed a limited drilling program on its Salamua prospect in Morobe province. Sample analysis was scheduled for the first half of this year, with future work being determined by the results of this phase.
Papuan Precious Metals has a number of active projects, targeting platinum, palladium, nickel, chromite, gold and copper at its Doriri Creek, Urua Creek, Dimidi Creek, Upper Ada’u River, Goroa Creek and New Hanover prospects in Oro province.
MIL Resources, working on Titan Mines’ iron sand prospects at Amazon Bay, recently reported the presence of vanadium in heavy-mineral concentrates from sampling there. The company is also prospecting for gold and copper at its nearby Poi license area.
Meanwhile, Xstrata is continuing evaluation work at the Frieda River copper-gold joint-venture project with Highlands Pacific and OMRD. With a pre-feasibility study already under way, a $36-million infill drilling program on the Horse-Ivaal-Trukai section of the project has shown porphyry mineralization extending to more than 600 m in depth.
Industrial minerals such as limestone are also of increasing interest, with a number of Chinese and Japanese companies evaluating the potential for cement production.