Update: Barrick denies claims of illegal gold exports from Porgera

Barrick Gold (TSX: ABX; NYSE: GOLD) has denied claims that it sought to unlawfully export gold from the Porgera mine in Papua New Guinea that it jointly owns with China’s Zijin Mining.

On June 5, Papua New Guinea’s mining regulator accused Barrick Niugini – the operator of the mine – of seeking to illegally export US$13 million in silver and gold to Australia. The country’s Mineral Resources Authority (MRA) said the move would be illegal given that BNL is not allowed to process or ship gold, since the government refused to extend the mining lease for Porgera nearly two months ago.

Barrick CEO Mark Bristow told Bloomberg news that the joint-venture “categorically rejects any claim that it, or its representatives, have violated the law in any way.” Bristow also explained that the dispute centred around gold that had been processed from ore that remained in its milling circuit after the mine was placed on care and maintenance.

“The public statement made by the Mineral Resources Authority of Papua New Guinea (the MRA) and its Managing Director Jerry Garry, based on unnamed “intelligence” alleging attempts were [made] by Barrick Niugini Ltd. (BNL) made to unlawfully export gold is incorrect,” Barrick Niguini stated in a June 6 press release.

Bristow also told Bloomberg that a Papua New Guinea court has granted the company the right to challenge the government’s decision to deny its mining licence and that a judicial review to assess whether the government followed due process will be held on July 20.

Barrick and its Chinese partner, Zijin Mining, temporarily halted operations at the mine in Enga province in late April, following Prime Minister James Marape’s decision not to renew Porgera’s lease.

Barrick, which is challenging the resolution in court, welcomed last month a ruling ordering the PNG government to review the requested lease extension for the Porgera mine.

Barrick and Zijin applied in June 2017 for a 20-year renewal of the Porgera’s lease, which expired in August last year.

Since then, they have faced backlash from landowners and residents over what they claim are negative social, environmental and economic impacts from the mine.

Negotiations with Porgera’s operators were complicated further by a split among the landowners.

PNG’s latest move could signal a further breakdown in relations, which may lead to the appointment of an arbitrator.

The ongoing dispute with PNG over the Porgera mine has done what the pandemic did not — dent Barrick’s expected output for the year.

The world’s second-largest gold producer now expects to produce between 4.6 million and 5 million oz. gold this year — 200,000 oz. lower than its previous estimate.

Barrick revealed at the time that PNG was also asking the company and Zijin to pay $191-million in back taxes, arising from tax audits conducted between 2006 and 2015.

The Toronto-based miner said the request, received on April 9, had no merit.

Porgera, located in PNG’s northern highlands region, contributes to about 10% of the nation’s exports and employs over 3,300 locals.

The open pit and underground gold mine sits at an altitude of 2,200-2,600 metres in Enga province, and is 600 km northwest of Port Moresby.