Mali frees Resolute executives after $160 million deal, AFP reports
The three executives, including CEO Terry Holohan, were freed from detention on Wednesday.
Canada’s Barrick Gold (TSX: ABX) (NYSE: GOLD) will take a dispute over mining rights to the Porgera gold mine in Papua New Guinea to the country’s Supreme Court after a lower court dismissed the company’s attempt to regain its license.
The world’s second-largest gold producer and its Chinese partner, Zijin Mining, became embroiled in a dispute with the PNG government in April, when Prime Minister James Marape rejected their application for a lease extension.
The companies temporarily halted operations in response. They also served Marape with a dispute notice arguing the refusal of the Porgera license extension violated a bilateral investment treaty between PNG and Australia. The move, they said, also infringed international law governing foreign investment.
Papua New Guinea refused to extend Barrick’s Porgera mine lease in April, and this week the National Court dismissed the company’s request for a review of that decision
Barrick said at the time that if the parties were unable to settle the row through negotiations, it would take PNG to international arbitration.
PNG’s National Court dismissed this week Barrick’s request for a review of Marape’s decision, which the miner now plans to take to the country’s top court.
“The company disagrees with numerous grounds outlined in the ruling,” Barrick Niugini Ltd. (BNL), which operated Porgera, said in a statement.
It also said that the government’s move last week to grant a 20-year lease for the mine to state-backed firm Kumul Minerals Holdings (KML) was “unlawful” and “invalid.” BNL added it was unaware of any consultation with local owners about the “non-transparent” and “rushed” decision to cut the company out.
The Toronto-based gold giant said it would will challenge that move, too, and it has launched a separate complaint with the World Bank’s International Centre for the Settlement of Investment Disputes.
Kumul Minerals said on Wednesday that it is open to talks with Barrick.
“My hope is that we can engage quickly and find a way forward,” Kumul Minerals chairman and acting managing director Peter Graham told The National newspaper in PNG.
Kumul Minerals is seeking to restart operations while negotiating a longer-term deal that would see Barrick and Zijin as equity participants and operator, Graham told the paper.
The fight over the Porgera’s lease keeps the mine, which last year produced almost 600,000 ounces of gold, in complete halt. It comes at a time when fears of global economic collapse triggered by the covid-19 pandemic have sent gold prices to record highs.
Barrick offered in May an extra 15% stake in the Porgera mine to local landowners, in a fresh attempt to break the impasse with the government over the mine’s future.
PNG later threatened Barrick with criminal proceedings, claiming the company’s joint venture in the country was planning to illegally export $13 million in gold and silver to Australia. BNL refuted the allegations.
The ongoing dispute has done to Barrick what the pandemic did not — dent its expected output for the year. It now expects to produce between 4.6 million and 5 million ounces of gold this year — 200,000 ounces lower than its previous estimate.
Barrick revealed at the time that PNG was also asking the company and Zijin to pay $191-million in back taxes, arising from tax audits conducted between 2006 and 2015.
Marape, who claims the lease was not extended owing to environmental and community concerns, said this week he wanted to reopen the mine “at the earliest.” He also added that the country was not “a banana republic” and that it was up to Barrick to get on a plane and discuss how they could remain in PNG under KMHL’s lease.
Barrick’s president and chief executive officer, Mark Bristow, said in March that Porgera had “tier one potential” but faced many challenges in the form of “legacy issues and an unruly neighborhood.”
The Porgera gold mine contributes to about 10% of the nation’s exports and employs over 3,300 people
The gold mine, located in PNG’s northern highlands region, is a joint venture between Barrick and Zijin Mining. Each owns 47.5% of the mine, with the remaining 5% held by landowner group Mineral Resources Enga.
Porgera contributes to about 10% of the nation’s exports and employs over 3,300 Papua New Guinea nationals.
The open pit and underground gold mine sits at an altitude of 2,200-2,600 metres in Enga province, and is about 600 km (370 miles) northwest of Port Moresby.
Other mining companies operating in PNG, including Australia’s Newcrest (ASX: NCM), have not been impacted by the decision regarding Porgera. The miner has “welcomed” the Prime Minister’s support for its Wafi Golpu gold and copper asset, adding that its special mining lease at the Lihir operations remains in good standing, with a renewal not needed until 2035.
