Barrick Gold Corp. [ABX-TSX; GOLD-NYSE] will continue mining at its Porgera operation after the National Court of Papua New Guinea ruled that the provisions of the country’s 1992 Mining Act applied to the mine.
The decision means Barrick can continue mining while its application to extend the special mining lease is being considered. The current leases expire on August 16, 2019.
Porgera is operated by Barrick Niugini Ltd., a joint venture between Barrick Gold and Zijin Mining Company. Barrick President and CEO Mark Bristow and Zijin executive director and senior vice-president George Fang are currently in Papua New Guinea to discuss the proposed extension with the government and the Porgera Special Mining Lease landowners.
Bristow and Fang welcomed the court’s ruling, saying it allowed for continuation of their operations at Porgera post August 16, 2019, which would enable to mine to continue delivering substantial benefits to communities and landowners of the Porgera Valley, as well as to national and provincial governments, while the special mining lease was finalized.
The ruling also confirmed that Porgera operated under the 1992 Mining Act and was entitled to seek an extension.
The Porgera joint venture is an open pit and underground gold mine located at an altitude of 2,200 to 2,600 metres in the Enga Province of Papua New Guinea, about 600 km northwest of Port Moresby.
Barrick and Zijin Mining Group each own 47.5% of the operation. The remaining 5.0% stake is held by Mineral Resources Enga. The Porgera operation is expected to produce 240,000 to 260,000 ounces of gold this year at an all-in sustaining cost of US$985 to US$1,025 an ounce.
That would be up from 204,000 ounces in 2018.
The mine is estimated to host proven and probable reserves of 2.1 million ounces of gold.
Bristow and Fang noted that Porgera was one of the largest mines in Papua New Guinea and has been a key driver of provincial and national economies for the past 30 years. Over that time, it has paid more than US$1.27 billion in taxes and royalties to the government and has contributed, on average, 10% of the country’s export income.
It also ranks as one of the country’s largest employers, with more than 3,100 Papua New Guinea employees. It has spent US$353 million with local businesses and paid US$294 million in equity cash to the Enga provincial government and Porgera landowners, who are part owners of the mine.
Barrick said Bristow’s meeting Friday with Papua New Guinea Prime Minister James Marape had served to confirm the need for a partnership approach to the future of the Porgera gold mine.
This was Bristow’s second meeting with the recently elected prime minister and his third visit to Papua New Guinea since he joined Barrick at the beginning of 2019. The Papua New Guinea government is currently considering an application for a 20-year extension by its operator Barrick Niugini Ltd.
Bristow said Prime Minister Marape’s view that Papua New Guinea should receive a better share of the benefits generated by the development of its mineral resources was in line with Barrick’s own commitment to ensuring that the value created by its operations should reward all stakeholders, especially its host governments and communities.
On Friday, Barrick shares rose 1.29% or 29 cents to $22.72. The shares are trading in a 52-week range of $12.54 and $22.96.