Barrick Gold forges ahead on Papua New Guinea mine in face of local backlash
Barrick Gold Corp. said it will elevate its Porgera Mine in Papua New Guinea to its top-tier assets, despite landowner and government demands to cede a larger stake and deteriorating security at the joint venture with China’s Zijin Mining.
Barrick aims to boost the mine’s production by 18 percent or more as it works to renew a 20-year lease for the mine. This comes amidst backlash from opponents who have charged that the mine is responsible for environmental and social problems, with minimal economic returns for locals.
Additionally, Reuters reported that Prime Minister James Marape’s government has been seeking richer terms from miners and oil and gas producers in the country.
The head of the country’s mining regulator said Barrick, the world’s No. 2 gold miner, is waiting to begin serious negotiations for permit renewal terms with the country’s executive council, led by Marape.
“If we can renew the permit on a reasonable basis, it stands up as a tier one asset,” Barrick Chief Executive Officer Mark Bristow told Reuters, referring to a large-scale, long-life, high-margin deposit.
PNG’s next steps with Barrick could influence billions of dollars of planned investment by global miners including Australia’s Newcrest Mining and St Barbara, who are eyeing new mines or mine extensions, but are wary of rising sovereign risk.
Miners, facing a dearth of new deposits and rising resource nationalism, may now have to cede greater rewards to other stakeholders.
Barrick’s tier-one designation, used describe a mine capable of producing 500,000 ounces of gold annually for at least 10 years at low cost, would place Porgera in league with Barrick’s crown jewel assets at a time major gold miners are desperate to replace shrinking reserves.
Barrick and Zijin’s combined 2018 production at Porgera was around 421,500 ounces.
Barrick and Zijin each own 47.5 percent of the mine, with the remaining 5 percent held by landowner group, Mineral Resources Enga.
Barrick Gold Corp. announced preliminary full-year and fourth-quarter results, which indicate that it has met its full-year guidance targets with preliminary gold production of 5.5 million oz, at the upper end of the 5.1 to 5.6 million oz range and preliminary copper production of 432 million lbs, exceeding the top-end of guidance of 375 to 430 million lbs. A strong fourth quarter capped off an excellent first year since the merger with Randgold at the beginning of 2019.
The preliminary fourth-quarter results show fourth-quarter sales of 1.413 million oz of gold and 91 million lbs of copper, as well as fourth quarter production of 1.439 million oz of gold and 117 million lbs of copper. The average market price for gold in the fourth quarter was $1,481/oz, while the average market price for copper in the fourth quarter was $2.67/lb.
Preliminary fourth-quarter gold sales and production were higher than third-quarter levels as a result of a strong fourth-quarter performance from Nevada Gold Mines, in particular at Turquoise Ridge, as well as Pueblo Viejo and Veladero. At North Mara, normal operations resumed in the fourth quarter following the lifting of restrictions at the tailings storage facility in September. Fourth-quarter gold cost of sales per ounce is expected to be in line with the third quarter. A quarter-over-quarter decrease in gold total cash costs per ounce and all-in sustaining costs per ounce of approximately 1-3 percent and 6-8 percent, respectively, is expected.
Photo: Nevada Gold Mines, courtesy Barrick Gold Corp.