PNG Exploration and Development Activity Accelerates

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 prefeasibility study on moving to
underground mining began last year, with a feasibility study scheduled for completion in 2010.
[Editor’s note: Frequent E&MJ contrib- utor 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 explo- ration activity in Papua New Guinea.]

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. It seems appar- ent from the attendance figure and overall mood of the delegates that a resurgence in demand for mineral com- modities 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 prin- cipal commodity of interest, with cop- per, 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 pro- duction 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, hav- ing 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 con- struction and commissioning are sched- uled for the end of this year, with pro- duction 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 vir- tually 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 remain- der of its life, the operation having pro- duced 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 increas- ing resources underground at Porgera during 2008, with its 2009 exploration efforts following upon the 2008 results. Current reserves are sufficient to sup- port mining both on surface and under- ground until 2017. The company is also continuing with its Porgera Deeps program, exploring the intersections of proven gold-bearing structures below the current underground infrastructure.

Meanwhile, with open-pit closure scheduled for 2013 at Ok Tedi, new efforts are under way to find additional resources within the locality. A prefea- sibility study on moving to underground mining began last year, with a feasibili- ty study scheduled for completion in 2010.

Construction of a key component of the $1.4-billion Ramu nickel-cobalt project in PNG—a 135-km-long slurry
pipeline from the Kurumbukari mine to the processing plant on the coast at Basamuk, shown here—has been
completed. Mine construction and commissioning are scheduled for the end of 2009, with production targeted at
31,150 mt/y of nickel and 3,300 mt/y of cobalt over an initial 20-year life.
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 integrat- ed geological model, and has outlined a mining method for the Golpu porphyry. Other prospects currently under evalua- tion 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 name- sake 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 sul- phide resources. Exploration is continu- ing 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 air- borne 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 proper- ty 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 indus- try in the past, the country’s mineral endowment is far more extensive. The prospect of diversification has led a number of companies to begin evaluat- ing 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 lat- erite 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 sched- uled for the first half of this year, with future work being determined by the results of this phase.

Papuan Precious Metals has a num- ber of active projects, targeting plat- inum, 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 concen- trates from sampling there. The compa- ny is also prospecting for gold and cop- per at its nearby Poi license area.

Meanwhile, Xstrata is continuing evaluation work at the Frieda River cop- per-gold joint-venture project with High- lands Pacific and OMRD. With a prefea- sibility study already under way, a $36- million infill drilling program on the Horse-Ivaal-Trukai section of the project has shown porphyry mineralization ex- tending to more than 600 m in depth.

Industrial minerals such as lime- stone are also of increasing interest, with a number of Chinese and Japanese companies evaluating the potential for cement production.

As featured in Womp 2009 Vol 10 -