New Porgera Limited (NPL) in a statement clarified on matters related to the reopening of the Porgera gold mine that they labelled as being the subject of speculation and considerable misinformation both in the national media and on social media platforms over the past week.
NPL stated that the benefit sharing terms agreed between the State, Barrick Niugini Limited (BNL), Kumul Mineral Holdings Limited (KMHL) and Mineral Resources Enga (MRE) to restart the mine ensure a transparent and fair distribution of the overall economic benefits that will be generated by Porgera over its 20-year mine life.
NPL highlighted that over the life of mine, PNG shareholders, comprising Porgera landowners, Enga province and the State (including KMHL which will hold the equity in new Porgera on behalf of the State), will receive 53% of Porgera’s overall economic benefits. BNL will receive the remaining 47%.
At a gold price of US$1,800 per ounce, PNG shareholders would expect to receive nearly US$7.3 billion (Kina ~25.2 billion) over a potential 20 year life and US$2.8 billion (Kina ~9.7 billion) in the first ten years. The current gold price is significantly higher at approximately US$2,170 per ounce.
Additionally, BNL, the operator of New Porgera Limited, has committed to financing the capital required to restart the mine. Furthermore, once the mine has restarted, any additional loans made by BNL or its affiliates to New Porgera Limited will be on an interest-free basis. This means the State of Papua New Guinea will never face a situation where it would be necessary to take out interest-bearing commercial loans to fund its portion of the capital needed for investment in the mine.
NPL emphasized that during the period between when the mine ceased operations in April 2020 until the reopening on 22 December 2023, BNL has alone funded 100% of the care and maintenance and preparatory restart costs totaling approximately US$677.6 million (Kina ~2.58 billion). The State, KMHL and BNL agreed that initially KHML’s dividends from New Porgera Limited (as well as the dividends paid to the entity jointly owned by Barrick and Zijin that holds shares in NPL) will be used to reimburse BNL for the care and maintenance and restart costs (other than some agreed nonrecoverable costs). However, the other PNG shareholders are not affected by this arrangement and will receive their dividends as they are declared following the start of operations.
New Porgera Limited in addition, will be a significant taxpayer, being subject to a 32% corporate tax rate, in return for fiscal stability under the Resource Contracts Fiscal Stabilization Act, and an increase in the royalty from 2% to 3%.
NPL stated that the proportion of equity and economic benefits that belong to the landowners is also a first in PNG’s agreements with international investors.
The statement also mentioned that separately there have been reports in the media that New Porgera Limited has selectively engaged individual clan members in discussions on compensation agreements and bypassed the Porgera Landowners Association. This NPL maintained is not true.
It was also stated that NPL has not selected the landholder representatives with whom it is dealing. Rather, it is following the Government’s agency system that has been used for compensation payments since 1989, which has long been accepted by landholders.
