After over three years’ closure, the final formalities required to reopen the Porgera gold mine in Papua New Guinea’s Enga Province are now being processed under the supervision of the Mineral Resources Authority. Business Advantage PNG spoke to the MRA’s Managing Director, Jerry Garry, for an update.

Porgera has an estimated gold reserves of 10 million ounces. After an initial ramp up, it is forecast to produce an average of 500,000 ounces per year. Credit: Zijing Mining

The Porgera gold mine in Enga Province has been under care and maintenance since its closure in April 2020 following the stalling of negotiations over a new special mining lease.

With negotiations finally completed following the signing of the Porgera Project Commencement Agreement (PPCA) in March – and outstanding tax issues seemingly resolved – all that is now required for the mine to be reopen is for a Special Mining Lease (SML) be issued to its newly-constituted operator, New Porgera Limited (NPL).

Statutory requirements

Under PNG’s Mining Act, certain statutory requirements have to be met for an SML to be issued. The first of these is a Warden’s Hearing, which has been gazetted for 31 July at Enga’s Paiam Sports Field and 1 August in Tari Square, Hela Province.

‘The Warden’s Hearing is a public forum designed to inform recognised landholders, to gauge their views about the plans for the mine and to register any concerns,’ explains Jerry Garry, Managing Director of PNG’s Mineral Resources Authority (MRA). These concerns are then recorded in the Warden’s Report to the PNG Mining Advisory Council, which Garry chairs.

‘We are looking at the end of August or the first week of September to issue a Special Mining Lease’

In parallel, the MRA is also currently assessing the technical aspects of NPL’s lease application, including its Proposal for Development, submitted in mid-June.

‘There is no regulated time frame for this assessment; typically, it can take between one and six months,’ says Garry. ‘However, Porgera is a brownfield site and there will be no material change to the mining method, so it should be pretty straightforward.’

While there are some legacy issues to be dealt with, notably the need to relocate and resettle people currently living within the lease area, Garry is expecting few delays.

‘We are looking at the end of August or the first week of September to issue a Special Mining Lease,’ he tells Business Advantage PNG.

Another requirement for the reopening of a mine is the holding of a Development Forum to consult on the benefits to be delivered to landowners of both the lease area and also those in the 15 ancillary tenements which surround the mine. Garry notes that completion of the forum prior to the issuing of an SML is not mandatory for a brownfield site like Porgera, but it is being scheduled to go ahead regardless on 7 August and conclude by mid-September.

New deal

The MRA’s Jerry Garry

NPL, the investment vehicle for the new Porgera mine, has already been granted early clearances to prepare for the mine’s reopening and Garry tells Business Advantage PNG he is optimistic that the mine site is ‘start-ready’.

He also highlights the greater benefits that the reopened mine will deliver to PNG stakeholders.

Under the terms of the PPCA, 51 per cent of the equity in NPL is now shared by PNG stakeholders, while the economic benefits from the mine will be shared 53 per cent by PNG stakeholders and 47 per cent by Barrick Niugini.

‘The royalty has increased from two per cent to three, while there is now a protected 10 per cent royalty to landowners and a five per cent royalty to Enga Provincial Government. In essence, about 18.5% of the total produced will be shared between PNG stakeholders, in addition to compensation, spin-off businesses, resettlement, an US$3 million (K10.7 million) annual contribution to the Porgera Development Trust, and one-off payment of US$13 million (K46.4 million) to landowners.

‘That’s unprecedented and a significant achievement,’ says Garry.

Jerry Garry will be speaking at the 2023 Business Advantage PNG Investment Conference, taking place in Brisbane on 10 and 11 August. For further details and to register to attend, click here.