PNG to get 51% in new Porgera Deal

Papua New Guinea will own 51% under a new Joint Venture Company for the re-opening of the Porgera Gold Mine.

The State of Papua New Guinea and Barrick Niugini Limited today formally signed the Framework Agreement at Government House paving the way for a new partnership with BNL.

Under the framework agreement the ownership of the Porgera Gold Mine will be held in a new Joint Venture company with PNG to hold a 51% stake and BNL with 49%.

The Framework Agreement also sets the foundation for operations arrangements, and benefit split

Under the new deal BNL will finance the start-up of the mine and remain the operator.

Previously the Enga Provincial Government and Special Mining Lease Landowners equally shared a 5% equity in the project through Mineral Resources Enga, while 95% was held between BNL and Zijin Mining Group at 47.5% each. Under the new deal landowners will have the opportunity to increase their equity beyond 15% with the additional 10% free equity paid for by BNL.

The previous royalty of 2% to the Special Mining Lease Landowners and the Enga Provincial Government has been improved with an additional 1% to 3% secured by the State.

Up to 2019, the economic split stood at around 25% for PNG Stakeholders with equity and  taxes, whereas the new deal will see that move to around 53% in favour of the PNG Stakeholders over the mine life.

There are no tax concessions in the new agreement, while an additional 2% will be applied to the 30% Corporate Income Tax for fiscal stability.

BNL will pay US$3 million annually for 10 years to the Porgera Sustainable Development Fund for community obligations, and a further US$15 million upfront to appropriate landowners.

Another result captured in the agreement is the immediate employment of former employees and development of key leadership and technical capabilities for Kumul Mineral Holdings Limited.

One of the major outcomes is that the State retains the right to acquire the full 49% of Porgera Gold Mine after 10 years at fair value.

Prime Minister, James Marape, said the signing of the Framework Agreement is a significant milestone in the Governments effort to build strong frameworks within the resource sector which will benchmark future considerations for similar projects around the country.

Marape acknowledged Barrick Gold Corporation President and Chief Executive, Mark Bristow, and the company for recognizing PNG’s aspirations and their willingness to partner PNG in realising this vision.

Bristow said Barrick, on behalf of BNL and Zijin were delivering on their promise of reaching a fair agreement on the future of Porgera for the benefit of all stakeholders.

The Framework Agreement now paves the way for the Development Forum with SML and Lease for Mining Purposes (LMP) landowners and the Enga Provincial Government, negotiations and finalising of the Shareholders Agreement, Mining Development Agreement, and other contracts.

The Porgera Gold Mine is expected to reopen within seven months once all arrangements are in place.

Cedric Patjole