Barrick Gold Corp. [ABX-TSX; GOLD-NYSE] is vowing to challenge the purported grant of a special mining lease for the Porgera gold mine in Papua New Guinea to a government-owned company.
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 km northwest 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.
Last year, Porgera produced 284,000 ounces of gold at an all-in-sustaining cost of US$1,003 an ounce.
Barrick and Chinese partner Zijin Mining Group each own 47.5% of the Porgera mine. The remaining 5% interest is held by Mineral Resources Enga (owned jointly by Porgera Special Mining Lease landowners and the Enga Provincial Government).
Barrick (Niugini) Ltd. (BNL), the operator of the Porgera mine, issued a statement Friday August 28 saying it is aware of actions taken by the Marape Government to purportedly grant a special mining lease to Kumul Minerals Holdings Ltd., a wholly state-owned enterprise.
It said that the Register of Mining Tenements records that the Head of State purportedly granted Special Mining Lease No. 11 to Kumul Mining Holdings on 25 August, 2020 for a period of 20 years. SML Lease No. 11 purports to cover 2,135 hectares of land at Porgera.
BNL said it considers that any such grant of SML Lease No. 11 to Kumul Minerals Holdings Ltd. to be unlawful and invalid. “BNL will take steps to challenge the purported grant of SML,” it said.
BNL went on to say in its press release that the Government conducted no consultations with the Porgera landowners prior to granting the SML, whether through a development forum or other consultative steps. “We are unaware of any representative of Kumul Minerals who has visited Porgera to meet with landowners and other community stakeholders to discuss the SML,’’ BNL said.
“In purportedly granting an SML in this non-transparent and rushed manner, the Marape Government sets a precedent of the State disenfranchising landowners and making decisions with fundamental consequences for their futures and those of their children without doing them the justice of listening to their views,” it said.
On Friday, Barrick Gold shares rose 3% or $1.11 to $38.59 on volume of 2.2 million. The shares are currently trading in a 52-week range of $41.09 and $17.52.
Barrick has previously stated the government of Papua New Guinea would not renew BNL’s 20-year special mining license. It also said it would contest the move, which it regards as tantamount to nationalization without due process. Meanwhile, the mine has been placed on temporary care and maintenance. Due to this ongoing situation, Barrick has issued no production guidance for Porgera.