PNG government approves Porgera mine restart for Barrick

Barrick Gold (TSX: ABX; NYSE: GOLD) has received the go-ahead from the government of Papua New Guinea to restart the Porgera mine, which has been placed on care and maintenance for three years.

Porgera, located in the central province of Enga was put into care and maintenance in April 2020 following a dispute over benefit sharing terms between the government, local people and Barrick, as part of renewing the mining lease.

On Friday, the gold miner announced that New Porgera Ltd. (NPL) was granted a special mining lease by the island country’s governor general, clearing the way for the 700,000-oz.-per-year operation to return to production. It hosts an orebody with measured and indicated resources of 10 million oz. and inferred resources of 3.4 million ounces of gold. It produced about 600,000 oz. of gold in 2019 before being put on care and maintenance.

In the joint venture, Barrick holds a 49% stake in NPL and is the mine’s operator. PNG stakeholders own the remaining 51%.

The lease issuance follows the signing of a mining development contract and the conclusion of a fiscal stability agreement between the PNG government and the Porgera joint venture. NPL will meet the mine property’s landowners in the coming week to settle compensation agreements, Barrick said.

Barrick chief executive Mark Bristow previously noted that subject to agreement on compensation, the Porgera mine was positioned to restart before the end of this year. Recruitment has been accelerated to employ the full workforce that will be required when the mine starts ramping up operations as soon as the compensation agreements are in place.

“It’s been a long road, but the end is now in sight. Negotiations between Barrick, the government and the other stakeholders required patience and persistence but the spirit of partnership in which they were conducted eventually led to an outcome acceptable to all,” Bristow stated in Friday’s press release.

“Barrick’s commitment to partnership with its host countries is also reflected in NPL’s ownership structure, which ensures the equitable sharing of the value created by Porgera with all stakeholders,” he added.

Barrick’s stock went up 4% by mid-day Friday in Toronto, valuing the company at $37.8 billion.