Drilling boosts grades at Ok Tedi

Increased grades at the Ok Tedi mine in Papua New Guinea will enable the operation to continue at near-current production rates, instead of declining over the remaining 15-year life as previously anticipated.

Toronto-based Inmet Mining (TSE) reports that infill drilling at its 18%-owned mine has increased proven and probable reserve grades to 0.87% copper and 0.9 gram gold per tonne from 0.7% copper and 0.69 gram gold. Proven reserves, as of May 31, were 376 million tonnes, while probable reserves were listed as 67 million tonnes.

In 1995, to date, Inmet has received $57 million in cash distributions from production at Ok Tedi.

However, increased payments from higher reserve grades will be partially offset by taxes that are now payable to the government of Papua New Guinea. In addition, future payments will be lowered, resulting from the settlement of a legal dispute.

Earlier this year, project operator BHP reached an agreement with the government of Papua New Guinea concerning alleged environmental damage resulting from mining operations.

The agreement, which is awaiting government ratification, will award a cash settlement to residents living adjacent to the Ok Tedi and Fly Rivers. These residents will receive an initial payment of $10 million and subsequent annual payments of at least $4 million. Total payments over the remaining life of the mine are expected to be $110 million.