Mineral Prospects and Opportunities in Papua New Guinea

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Mineral Prospects and Opportunities in Papua New Guinea Philip Samar Acting Managing Director Mineral

Mineral Prospects and Opportunities in Papua New Guinea Philip Samar Acting Managing Director Mineral Resources Authority 2 nd International Energy Cooperation Symposium, Dec 18, 2012 Seoul, Korea

Introduction n n n n Mineral dependant economy (60% total export receipts 2010). Average

Introduction n n n n Mineral dependant economy (60% total export receipts 2010). Average 3 year production - 55 tonnes Au, 61 tonnes Ag, 182, 000 tonnes Cu. Contribution from 3 x large mines, 2 x medium mines, 2 x small mines and 100, 000 artisanal miners. 5 Year portfolio - 4 x large mines to commence production. Gold output ~100 tonnes by 2016. Diversification of mineral base (Co, Ni, Mo, RE, Coal). US$15 billion LNG Gas investments (Exxon Mobil, Interoil) Government owned and operated mines Election year, new Govt to be formed by Aug. 2012

Economic Contribution

Economic Contribution

Operating Mines 1. 2. 3. 4. 5. 6. 7. 8. 9. n Porgera (Barrick

Operating Mines 1. 2. 3. 4. 5. 6. 7. 8. 9. n Porgera (Barrick Gold) Kainantu – on C&M (Barrick Gold) Ok Tedi (PNG Govt) Tolukuma (PNG Govt) Sinivit (New Guinea Gold) Lihir (Newcrest) Simberi (Allied Gold) Hidden Valley (Harmony/Newcrest JV) Ramu – MCC (Chinese Government) The Ramu Ni/Co mine commenced commissioning operations in January 2012 and is the latest addition.

2012 Forecasted Production No. Mines Gold (ozs) Silver (ozs) Copper (t) 1 Porgera 500,

2012 Forecasted Production No. Mines Gold (ozs) Silver (ozs) Copper (t) 1 Porgera 500, 000 80, 000 - 2 Kainantu C&M - 3 Ok Tedi 350, 000 900, 000 140, 000 4 Tolukuma 60, 000 150, 000 - 5 Sinivit 50, 000 2, 500 - 6 Simberi 70, 000 - - 7 Lihir 800, 000 - - 8 Hidden Valley 200, 000 51, 000 - 9 Ramu 32, 000 t (Ni) 3, 000 t (Co) Total production: 2, 030, 000 1, 183, 500 140, 000

Mines under Commissioning No. Mines 1 Ramu Owner China Metallurgical Corporation (MCC) Commodity Ni

Mines under Commissioning No. Mines 1 Ramu Owner China Metallurgical Corporation (MCC) Commodity Ni – 32, 000 t Co – 3, 000 t Start-up Mine Life 2012 +30 yrs v Ramu – owned and operated by China Metallurgical Construction Corporation (MCC) of China. v Commissioning commenced as of January 2012 v Challenging operating in a new environment with language and cultural barriers.

Five Year Portfolio – World class projects No Mines 1 Solwara 1 2 Yandera

Five Year Portfolio – World class projects No Mines 1 Solwara 1 2 Yandera 3 Frieda 4 Wafi/Golpu Owner Nautilus Minerals Resource Estimation Commodity 2. 2 Mt @6. 8% Au – 250, 000 ozs Cu, 5 g/t Au, Ag – 50, 000 ozs 23 g/t Ag, Cu – 100, 000 t 0. 4% Zn Marengo 600 Mt @0. 48% Cu – 82, 000 t Mining Ltd Cu Eqv. Mo – 6, 700 t Xstrata Start-up Minelife 2014 +5 yrs 2016 +20 yrs 1. 9 billion Cu – 190, 000 t tonnes @0. 45% Au – 280, 000 ozs Cu 2015 +20 yrs Harmony. N 1 billion tonnes, Cu – 400, 000 t ewcrest 9 Mt Cu, 26 Moz- Au – 500, 000 ozs Au 2017 +30 yrs

Focus on Diversification n n PNG has traditionally been a Gold, Copper & Silver

Focus on Diversification n n PNG has traditionally been a Gold, Copper & Silver producer. Strong focus now on diversification into : - Nickel & Cobalt (Ramu mine) - Chromite/Iron (Beach Sands FS) - Molybdenum (Yandera project) - Industrial Minerals - Coal (new EL applications) - Rare Earths (PPP option)

Offshore COAL Iron Sands COAL Rare Earths Nickel/Cobalt Iron Sands

Offshore COAL Iron Sands COAL Rare Earths Nickel/Cobalt Iron Sands

Institutional Reforms n n n Review of Fiscal Regime for mining exploration & development

Institutional Reforms n n n Review of Fiscal Regime for mining exploration & development in 2001. Set up of Mineral Resources Authority (MRA) to better regulate, administer and promote PNG’s mining industry. Set up of Dept of Mineral Policy to develop government policies on mining industry. EU Sysmin TA – Improved Geological mapping World Bank TA – institutional strengthening. Recruitment of specialist skills sets

Review of Fiscal Regime - Primary Changes n n n n Mining Levy –

Review of Fiscal Regime - Primary Changes n n n n Mining Levy – phased out. Income Tax Rate – from 35% to 30%. Dividend Withholding Tax – from 17% to 10%. Changes to treatment of Depreciation. Gains on Exploration deductibility. Additional Profits Tax – phased out. Review of Mining Legislation and Policies 2011

Preliminary Results – Area 1 Porgera mine

Preliminary Results – Area 1 Porgera mine

POLICY & LEGISLATIVE REVIEWS (Tenements) n ONLINE TENEMENT APPLICATIONS AND APPROVALS PROCESSING. n INCREASE

POLICY & LEGISLATIVE REVIEWS (Tenements) n ONLINE TENEMENT APPLICATIONS AND APPROVALS PROCESSING. n INCREASE TENURE OF EXPLORATION LICENCES FOR A 3 YEAR TERM OR UP TO A 5 YEAR TERM DEPENDING ON THE NATURE OF EXPLORATION AND CIRCUMSTANCES SURROUNDING EACH APPLICATION. n FAST TRACKING THE APPROVALS PROCESS FOR TENEMENT APPLICATIONS WITH SPECIFIED TIME FRAMES TO BE INTERNATIONALLY COMPETITIVE AND ATTRACTIVE.

POLICY & LEGISLATIVE REVIEWS (Policy) n COMMUNITY AWARENESS AND CONSULTATIONS TO BE A MANDATORY

POLICY & LEGISLATIVE REVIEWS (Policy) n COMMUNITY AWARENESS AND CONSULTATIONS TO BE A MANDATORY REQUIREMENT AND TO ENABLE THE DEVELOPMENT OF THE SOCIO-ECONOMIC AND ENVIRONMENTAL IMPACT ASSESSMENT GUIDELINES n PROV. GOVT. AND LANDOWNER PARTICIPATION TO BE IMPROVED TO ALLOW FOR MORE CONSULTATIONS AND PARTICIPATION IN THE PROJECT DEVELOPMENT PROCESS. n CLARITY ON THE VARIOUS BENEFIT STREAMS TO THE RESPECTIVE STAKEHOLDERS.

Other Sectoral Developments… LNG Gas development (US$10 billion) n Geothermal mapping and analysis Alternative

Other Sectoral Developments… LNG Gas development (US$10 billion) n Geothermal mapping and analysis Alternative Energy sources to power mining operations. n Transport & Infrastructure – Govt plan to upgrade facilities. n

Challenges… n n Sustainable outcomes from mine derived benefits for stakeholder (State/Landowners/Company). Better management

Challenges… n n Sustainable outcomes from mine derived benefits for stakeholder (State/Landowners/Company). Better management of social issues that affect mine operations. Provision of essential social services. Ensuring more clarity and transparency in existing & proposed mining policies (current review of legislation & policies).

www. mra. gov. pg

www. mra. gov. pg