SINGAPORE (Reuters) - Papua New Guinea Prime Minister James Marape said on Thursday that a joint venture of Barrick Gold Corp ABX.TO and China's Zijin Mining 601899.SS2899.HK was set to remain operator of the Porgera gold mine following talks in Port Moresby.
In April, Marape had refused to extend the expired mining lease of operator Barrick Niugini Ltd (BNL), citing environmental and social problems.
That led BNL to mount legal challenges and close down the mine in a year spot gold prices XAU= have hit all-time highs.
“We have agreed in principle that Papua New Guinea will take a major share of equity under the new arrangements and BNL will retain operatorship and there will be a fair sharing of the economic benefits,” Marape said in a statement after talks with Barrick Gold Chief Executive Mark Bristow on reopening the mine.
Barrick and Zijin each hold 47.5% in Porgera, with the remaining 5% held by Mineral Resources Enga, a joint venture of Enga province and local landowners.
Marape said in a Facebook post on Friday PNG’s equity stake would be a majority. He also mentioned that “subject to final touch ups” he had not made concessions on other major points, including that the mining lease will be held by a state-owned entity and Barrick should “phase out at an agreed time”.
Barrick declined comment and BNL had no immediate response when contacted by email on Friday.
Zijin’s board secretary Zheng Youcheng confirmed to Reuters the company could reduce its stake in Porgera, but said the whole project was still under negotiation.
Zijin’s Shanghai shares rose as much as 4% on Friday to 6.82 yuan, their highest since Sept. 21, before easing to be up 0.8% in afternoon trade. Its Hong Kong shares rose as much as 2.9%.
Marape and Bristow “have agreed to meet again in the coming weeks once negotiations conclude”, Thursday’s statement said.
“I am certain that my team will be able to work with the PNG state negotiation team ... in finalising full commercial details,” it quoted Bristow as saying.
Reporting by Tom Westbrook; additional reporting by Melanie Burton in Melbourne; additional reporting by Jeff Lewis in Toronto and Beijing newsroom; Writing by Tom Daly; Editing by Steve Orlofsky, Stephen Coates and Richard Pullin
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