There are a number of large new projects that are planned for Papua New Guinea in the coming decade, and another wave is waiting in the wings. These exploration projects encompass mining operations across a spectrum of size as well as technical capability and operations. They range from small, locally grown prospectors to junior developers to bulk-tonnage porphyry and epithermal resources, from early exploration to late-stage feasibility studies.
NEW PROJECTS: One such project in the advanced stages of exploration is the Woodlark Island project located in the Milne Bay Province. In February 2011 Woodlark Mining’s parent company Kula Gold announced its proven and probable reserves of the site at 10.39m tonnes at 2.1 grams per tonne (gpt) for a total of approximately 700,000 ounces of gold. Three pit mines – Busai, Kulumadau and Woodlark King – will combine to feed the 1.5m-tonne-per annum (mtpa) processing plant (with possible upgrade capacity to 2.6 mtpa). Production at the site, which has been prospected for gold on and off since the late 19th century, is expected by 2013 with an initial planned lifespan of seven years. Another company pressing forward with new exploration activity is Papua Mining, which holds three exploration licences for concessions in West New Britain and Ambunti in the East Sepik Province of mainland PNG. So far, the company has submitted applications for an additional 12 permits and has already undertaken initial exploratory work as of early 2012 with the expectation of drilling exploratory wells by the end of the year. Targeting primarily copper and gold reserves, the Papua Mining raised approximately €8.4m from a February 2012 initial public offering of 15m ordinary shares on the Alternative Investment Market in London and is headed by veteran miner and former Glencar Mining CEO Hugh McCullough. Allied Gold is also exploring for copper and gold deposits on the Tabar and Tatau Islands where it had drilled six exploratory wells as of early 2012 just to the south of its active Sumberi mine in north-east PNG. Exploratory drilling work carried out by its then joint venture partner Barrick Gold (whose share has since been bought out by Allied) at the Big Tabar site revealed mineralisation levels of up to 1.13% copper and 1.58 gpt gold. Five locations at Tatau have also been probed – Tugi Tugi, Mount Letam, Seraro, Pepewo and Mount Tiro – indicating a wide variation in gold content ranging from 0.81 gpt at Tugi Tugi to 5.65 gpt at Pepewo.
EXPLORING FURTHER: The Crater Mountain site located in the highlands just south of Goroka is another potentially attractive gold-copper-molybendum mine, which was first explored by BHP Billiton before the company retreated from PNG operations. Since late 2011 the area has been mined only by low-tech, small-scale operations carried out by local artisanal miners, although operator Gold Anomaly is currently undertaking a comprehensive investigative programme. The company was drilling a series of exploratory wells reaching as deep as 1000 metres as of early 2012. After securing an additional 10% share in the Crater Mountain project from Londonlisted Triple Plate Junction, Gold Anomaly now controls an 80% stake in the project.
The country’s only 100% domestically owned largescale mine, OK Tedi, is also looking beyond the impending closure of its existing mine in Western Province. To date, Ok Tedi Mining has inked two farm-in agreements with Australia-based junior mineral explorer Frontier Resources requiring $2.5m in initial exploration commitments. The partners are collaborating on two joint ventures to explore gold and copper deposits. The first joint venture includes two exploration licences for the Bulago gold prospect located in the central highlands region while the second covers three licences for New Britain Island, the latter of which contains six previously documented porphyry copper-gold occurrences as well as an additional four probable occurrences. Frontier is also exploring a proprietary site named Andewa and has already carried out a grid-based soil sampling programme for a 21-sq-km area of the site.
STRENGTH IN NUMBERS: A host of other companies active in various PNG mining projects have also teamed up to explore numerous other sites in order to spread financial risk. Two mining heavyweights, Australia-based mining giant Coppermoly and Barrick Gold of Canada, have teamed up to explore new territory on New Britain Island after the latter acquired a 72% stake in the former’s three PNG tenements. Under the $19.85m farm-in agreement, Barrick is charged with the exploration (initiated in 2011) of the three sites: Simuku, Nakru and Talelumas. Some 27 holes have been drilled at the Nakru-1 copper-goldzinc system, the most advanced of the four Nakru prospects, with one intersecting 213 metres grading at 0.92% copper and 0.33 gpt of gold. Initial exploration of the Simuku project by Coppermoly has revealed an inferred resource of 200m tonnes at a grade of 0.36% copper and could contain as much as 700,000 tonnes of copper, 12,000 tonnes of molybdenum, 12 tonnes of gold and 391 tonnes of silver.
In February 2012 Australia-based mining outfit Central West Gold released a revised agreement to purchase the remaining 80% stake in a mining tenement to explore a 286.44-sq-km area near Kompiam in the Enga Province. Initially, the company bought a 20% stake in the project for a total $446,787 in April 2011 along with an exploration expenditure commitment of $992,860.
REVISITING OLD SITES: The country is so well endowed with mineral resources, in fact, that even old material extraction sites not originally utilised for mineral production are now being explored to capitalise on the current trend of high commodity prices. Pacific Niugin, for example, has obtained exploration permits for a number of old gravel mining sites in the Madang and Morobe provinces. The company estimates that the area surrounding the Bulolo gravel pit, which was active from 1934 to 1942 and again from 1947 to 1965, contains gold grades as high as 50 gpt. Pacific Niugini also holds exploratory permits in the same region for the Owen Stanley Metamorphic Belt and has discovered significant copper mineralisation at its Gusap tenement in Yangon.
CONTINUING MOMENTUM: Even with so many projects currently in the exploratory and early developmental stages, there is no sign that prospectors are slowing down in their pursuit of discovering the next big find. If anything, interest in PNG’s undiscovered treasures has intensified in recent years.
As of June 2011, PNG’s Mineral Resources Association (MRA) was reviewing hundreds of exploration licence applications covering a total area of 342,673 sq km (262,421.36 on land and 80,251.64 offshore). This is substantially greater than the 116,654.16 sq km (78,564.02 on land and 38,090.14 offshore) covered by current exploration licences as well as the 76,649.61 sq km of territory (24,343.55 on land and 52,306.06 sq km offshore) under renewed licences.
One of factors in stimulating the dramatic uptick in interest over new mining sites in central PNG is the publication of new geological surveys of vast tracts of the country released in 2010. Sponsored by the EU through its SYSMIN funding programme, the €50m mining sector support programme was initiated in 2009 and consisted of both helicopter-based aerial surveys followed up by terrestrial exploration.
SURVEYED: The survey targeted two rugged and under-explored regions of the country located along the mountainous central backbone of PNG’s main island. Area one covers a region encompassing 62,000 sq km, including parts of the provinces of East Sepic, Southern Highlands, Eastern Highlands, Western Highlands, Madang, Western and Chimbru. Located just to the south-east, the second 29,600-sq-km area covers the Morobe, Central and Gulf provinces. A consortium of Deutsche Montan Consulting (Germany), Council of GeoScience of South Africa and lead organisation British Geological Survey carried out the fiveyear survey, which was completed in March 2011. The detailed results of these efforts are now available from the MRA for a nominal price that is a fraction of what even portions of the exploratory work would cost if carried out individually by private companies.
With the costs of exploration now substantially reduced, interest in the two surveyed areas in the mapped regions has gone from virtually non-existent in 2007 and 2008 to a scramble for new permits by 2011. Looking to build on this success, the MRA is planning on funding its own similar survey that would extend coverage from the western edge of the EU survey all the way to the Indonesian border.
In addition, the leap of new prospectors into new and relatively unexplored regions throughout the country has spurred hope of new discoveries that will drive the PNG economy far into the future. “We are optimistic that we may find a new gold and copper belt which could bring another Frieda River or Ok Tedi,” Philip Samar, the executive manager of the MRA’s Development Coordination Division, told OBG.
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