April 30, 2020 / 8:50 AM / a month ago

Newcrest says it is ready to restart talks with PNG on gold project

MELBOURNE, April 30 (Reuters) - Australia’s Newcrest Mining said on Thursday it was ready to resume talks with Papua New Guinea (PNG) to develop its major Wafi Golpu gold project after the government declined to renew a mining lease for Barrick Gold last week.

Newcrest had hoped to get development permits by last June, but the project was delayed after it became entangled in a dispute between PNG’s national and provincial governments over any division of royalties.

The disagreement was resolved in court in February, paving the way for the resumption of talks on the project with the with the Pacific country’s government.

“We are hearing publicly and through communications to us, that they are ready to restart discussions, we remain ready and able and available to restart when the government is ready to sit down,” Newcrest Chief Executive Sandeep Biswas said.

“Obviously, they have a lot on at the moment. But I think they do see investments like this as a way forward in PNG to counteract the downturn and effects of the COVID crisis,” he said on a quarterly results call.

The downturn in oil and gas markets triggered by the novel coronavirus pandemic could also make the gold and copper project, 65 km from PNG’s second biggest city of Lae, more valuable to it, he said.

Investors have grown wary as the resource rich nation has reviewed terms of oil and gas and minerals projects, worried about whether the government was intent on nationalising assets or if it was manoeuvring for better deals.

Papua New Guinea said in September it wanted to keep 40% of gold produced from the Wafi Golpu project before it declined last week to approve the Barrick lease extension, for the Porgera project, which Barrick operates but jointly owns with China’s Zijin Mining.

PNG officials were not available for comment on Thursday but Prime Minister James Marape, in a social media post, hinted that the government could yet change its mind on the mining lease.

“To Barrick, we appreciate that you have been part of us since 2006 ... We want to work with you to properly phase you out (depending on negotiations).”

Still, the Porgera project had its own specific issues that did not apply to Newcrest, either its Wafi Golpu project or another existing gold-mining operation, at Lihir, Biswas said.

“It’s fair to say it clearly has raised concerns ... But I hasten to point out that these things are project specific. Lihir is highly supported by the locals, the province and the state. Our lease is clear until at least 2035,” he said.

The Wafi Golpu project is expected to take five years to develop and to produce 320,000 ounces of gold and 150,000 tonnes of copper at peak production. ($1 = 3.5398 kinas) (Reporting by Melanie Burton Editing by Robert Birsel)

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