Political problems in Papua New Guinea should have no effect on the development of the Lihir gold project, said Joseph Mazur, Battle Mountain Gold’s (TSE) vice-president of administration and communications.
Battle Mountain and Kennecott, a unit of Britain’s Rio Tinto Zinc, are hoping the decision to develop the project will be made by the first quarter of 1992, Mazur told the Canadian Institute of Mining, Metallurgy and Petroleum in Toronto recently.
With reserves standing at 23.3 million tons grading 0.095 oz. gold per ton, Mazur said the Lihir deposit is probably the world’s largest undeveloped potential mine outside South Africa. Battle Mountain controls 11% of the project via its 56.5% stake in Niugini Mining, which in turn owns 20% of Lihir. As operator and holder of the remaining 80%, Kennecott is looking at a number of alternatives to be presented to the Papua New Guinea government, said Mazur.
The Lihir deposit is on a small island about 450 miles northwest of Bougainville Island. Mazur was asked if he thought recent unrest on Bougainville would affect the project.
He replied that the separatist movement on Bougainville is purely a local problem and there is no reason to believe those conditions exist at Lihir. A much greater problem is raising money for a project of this size,” said Mazur who predicted that capital costs could be in the US$1-billion range. As Battle Mountain’s original Fortitude mine in Nevada will be exhausted by 1993, Lihir is an important long-term part of the company’s game plan to diversify into new operating theatres outside North America. He said the partners are optimistic about the success of the project even though the ore zone is complex and pressure oxidization techniques will probably be needed to recover gold mineralization. “The technology is no longer cutting edge,” he said. Having to dispose of tailings on such a small island is also “nothing new” in this industry, he added.
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