Newcrest’s Chief Operating Officer PNG, Craig Jones, talks with Business Advantage PNG about the future of Lihir gold mine and Wafi-Golpu, and the impact COVID-19 has had on its operations.

How important is Papua New Guinea to Newcrest’s business in 2022 and the future?

PNG is a very significant part of Newcrest’s overall business. Last year [2020], Lihir produced about 35 per cent of the overall gold production for the group. At Lihir, we employ around 5,000 people and most are Papua New Guineans; that’s something we’re very proud of.

From a revenue perspective, Lihir generated about 35 per cent of the overall revenue for Newcrest in 2020 and about 17 per cent of the group’s EBIT.

One of the very unique things about Lihir is its ore reserves: it has a 22-million-ounce gold reserve, or about 30 years of reserve life, which sets it apart from most other mines in the world.

The other very important part of Newcrest’s business in PNG is the Wafi-Golpu project. Wafi-Golpu will be PNG’s first block caving operation—something that Newcrest has a very strong foundation. We’re working very closely with our joint venture partner, Harmony Gold, for the development of the project.

Lihir Gold Mine is in Niolam Island, 900 kilometres north-east of Port Moresby. Credit: Newcrest Mining

What’s been the COVID-19 situation at Lihir?

The local and global travel restrictions have made it very difficult to move people around. The quarantine has impacted people in terms of being isolated from their peers and from their families, and that’s impacted our ability to attract and retain staff.

That said, we’ve had great support from the local level governments, the provincial government and the national government.

In 2020, we spent K180 million to keep the business safe during COVID and that obviously has impacted our all-in sustaining costs as a business.

Now, the most important initiative that we’ve turned our mind to is supporting the roll out of the vaccination across New Ireland Province. Back in April 2021, we committed US$1.8 million to UNICEF. It is working very closely with the New Ireland Provincial Health Authority and Australian Doctors International to facilitate the program.

What are the plans for Lihir?

We’ve been working on a number of initiatives and projects to improve the operational performance of Lihir, but also increase value.

During the financial year just gone, we completed our Lihir Mine Optimisation Study. One of the key things that came out of that study is that it identified an opportunity to increase value through what we’re calling Phase 14A cutback.

A pre-feasibility study is focusing on extending the Phase 14 cutback and safely steepening the walls of the mine to access existing resources that would’ve otherwise been inaccessible using standard mining practice.

This gives us the opportunity to access higher grade ore earlier and opens up a separate mining front.

Craig Jones is Newcrest Mining’s Chief Operating Officer PNG. This is an edited extract of his presentation at the 2021 Business Advantage Papua New Guinea Investment Conference.