Vancouver – Yet again, the issue of political risk has raised its ugly head in Papua New Guinea. The latest bout of vandalism has forced partners Placer Dome (PDG-T), AurionGold and Oil Search to temporarily stop mining at the Porgera open pit operation in the country’s remote highlands.
Placer estimates that it will take three weeks to restore power to its 50%-owned gold operation, following the cutting of a number of power poles believed to be motivated by the recent political elections.
The vandalism is the latest in a series of events that began in July. Power was just restored to the plant on Aug. 20, but another pylon was vandalized on Aug. 23. The stoppage was caused by the felling of power pylons from the Hides Gas field in the southern portion of the Highlands. Three pylon towers are currently down.
Porgera is a key earnings driver for AurionGold, which is a hostile take over target of Placer. In the year ended June 30, 2002, Porgera accounted for A$51.3 million or 41.3% of AurionGold’s earnings before interest and taxes, along with A$119.6 million or 25.5% of its sales revenue.
During 2001, 6 million tonnes of ore were mined and milled yielding 910,434 oz. of gold. The project has proven and probable reserves of 8.3 million oz. of gold. AurionGold holds a 25% stake in the operation, with 20% owned by Oil Search and 5% by the Enga Provincial Government and Landowners.
Placer expects the interruptions to reduce its share of Porgera’s gold production this year by 10%, or 30,000 oz, to 308,000 oz.
The joint venture is in talks with the government of Papua New Guinea to help address the problems.
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