New PNG government spells progress for Lihir

The outstanding issues hindering development of the Lihir gold deposit in Papua New Guinea (PNG) are being resolved, according to 20% participant Niugini Mining.

Nuigini is held about 56% by Battle Mountain Gold (TSE), based in Houston, Tex. The largest stake in the Lihir project is currently held by RTZ, with an 80% interest.

Niugini reports that since late August, 1994, when PNG underwent a change of government, work has accelerated on the granting of a special mining lease for Lihir.

Former prime minister Paiis Wingti and his government were replaced by a coalition government headed by Sir Julius Chan. This change was the result of a high court ruling on Wingti’s re-election in late 1993.

Prime Minister Chan has publicly stated that his top priorities are resolving the Bougainville crisis (precipitated by a forced shutdown of the Bougainville copper mine, at the insistence of natives) and getting the Lihir project started. The new minister for mining and petroleum, John Giheno, stated that government ownership in Lihir is not a contentious issue and will be limited to 30%, as stipulated in the PNG Mining Act of 1992 (the previous government was seeking a further increase to 50%).

Negotiations have also been held with landowners to resolve the issues of relocation and compensation, as well as the issue of landowner equity in the project (such equity would be provided from the government’s share). In early December, 1994, Prime Minister Chan said he expected the special mining lease would be issued “in the near future” so that construction of the project could begin. “This project will mark a new phase of PNG resource development and will focus the international community’s attention on my government’s commitment to a strong, viable and developing resource industry,” he said.

Engineering studies are in progress, in anticipation of a lease being granted sometime in mid-1995. Financing arrangements are also being made for Lihir Gold, the company that will hold the interests of all parties, including those of government. RTZ previously announced plans to bring in a third industry partner, Vengold (TSE), thereby reducing its stake in the project. The initial public offering of shares by Lihir Gold is expected in the first half of this year.

At last report, Lihir contained proven and probable reserves totaling 98.4 million tons averaging 0.139 oz. gold per ton.