The role and revenues of state-owned Kumul Minerals Holdings are set grow significantly as it prepares to add a major stake in the Porgera gold mine to its portfolio. Business Advantage PNG asks recently-appointed Managing Director Sarimu Kanu about his vision for the company.

KMHL’s Sarimu Kanu

Business Advantage PNG (BAPNG): As the state-owned enterprise responsible for managing and developing PNG’s mining assets, what do you see as Kumul Minerals Holdings’ immediate priorities?

Sarimu Kanu (SK): We’re aggressively implementing this year’s annual operating plan and making inroads into what we see as value-adding to Kumul. That means moving out from the sole position with Ok Tedi Mining Ltd (OTML) and diversifying our revenue base.

Key initiatives include concluding negotiations with Barrick Gold on the reopening of the New Porgera Mine and progressing negotiations with the Wafi-Golpu JV partners on the finalisation of the Mine Development Contract (MDC).

BAPNG: Are there any outstanding agreements with Barrick that still need to be finalised?

SK: Following the recent visit from Barrick CEO Mark Bristow, we have bedded down two outstanding considerations, including the second amendment to the Porgera Project Commencement Agreement (PPCA) and nearing the finalisation of the Porgera Project Operatorship Agreement (PPOA).

‘The workforce at OTML is considerably higher than requirements and, given the shortage of mining expertise in PNG, I’ve advised Barrick that those with the relevant skills will be available for recruitment at Porgera.’

Finally, there’s the Mine Development Contract (MDC), which must be signed before the grant of the Special Mining Lease. The critical Warden’s Hearing will be held on 31 July and 1 August and the Development Forum on 7 August. This is when impacted communities agree to how equity, royalties and compensations are shared among themselves. We expect the special mining lease (SML) for [New] Porgera to be granted by the first week in September, after which mine operations will commence.

BAPNG: What do you see as Kumul Minerals’ role in New Porgera?

SK: We will participate actively in matters relating to State and Provincial Governments. One key example is the resettlement program, which may require the compulsory acquisition of land, to turn it into State land, so that we are able to resettle those people appropriately. This requires us to liaise with the Department of Lands, together with Barrick.

BAPNG: What are your plans for Ok Tedi Mining (OTML), which has been struggling from declining production and operational performance for the last five years?

SK: Following a forensic audit of OTML’s operations, management is implementing key recommendations and we’re witnessing some good divisional turnarounds and operational excellence, which we expect to continue elevating revenue and dividends to the state.

Critical areas for operational improvement are in our mill and truck availability, previously at the lower end of average mining operations. We’re tightening up on excessive spends on some questionable contractor awards and extremely high long-term consultancy rates.

The workforce at OTML is considerably higher than requirements and, given the shortage of mining expertise in PNG, I’ve advised Barrick that those with the relevant skills will be available for recruitment at Porgera.

We’re also driving a life-of-mine extension strategy at OTML from 2023 to 2050 and are currently spinning off the exploration licenses (ELs) surrounding the SML into a subsidiary called Kumul Minerals Exploration Ltd.

BAPNG: What other developments are on the drawing board right now?

SK: In addition to concluding some strategic takeover and farm-in positions during the third and fourth quarter of 2023, we’re also driving consolidation strategies (firstly within Milne Bay and New Ireland), where we can develop stranded [gold mine] projects for the benefit of locals, Provincial Government and the State.

We’re commissioning a feasibility study into value-adding the ore (500,000 to 1 million ounces) from these disparate prospects into one central processing facility. We plan to make it conducive for potential exploration companies, from the comfort of their own offices globally, to access better quality geological databases, which will hopefully encourage them to acquire ELs.

To make this happen, we will be partnering with the Mineral Resources Authority’s geological survey team. We have also signed agreements with companies providing non-intrusive technology that can identify areas of mineralisation without the need for excessive drilling.

KMHL’s interests and where the dividends go

• 67 per cent of the Ok Tedi Mining Ltd (operator of the Ok Tedi copper/gold mine):
  • 50% of the dividends go direct to the State.
  • 10% goes to churches, community & social obligation.
  • 7% goes to PNG’s Sovereign Wealth Fund.
  • 23% goes into reinvestment.
  • 10% goes into operational requirements.

• 36 per cent of New Porgera Limited (new operator of the Porgera gold mine)

KMHL will be carrying the whole 51 per cent of the State’s equity in the mine and will be using its dividend to pay off the capital investments.

But Provincial Governments and landowners will be entitled to their share [15%] of dividends from day one.

• 34 per cent of Bougainville Copper Ltd

Is being transferred to the Autonomous Region of Bougainville (Bougainville Mineral Resources Company).