Report from Papua New Guinea Placer Pacific gold jewel in the crown

Events and achievements in minerals exploration in 1986 confirmed Papua New Guinea as one of the places to be for gold explorationists and producers alike. Precious metals exploration activity rose to a new high level with 159 currently active prospecting authorities in force, compared with 140 at 1985 year-end.

Explorers, both juniors and majors, were spurred on by promising results achieved at numerous properties, such as Porgera, Lihir and Misima, in this island nation located in the southwest Pacific on the rim of the so-called “Ring of Fire.”

Without doubt, the jewel in the crown of currently-known Papua New Guinea gold deposits is Porgera, located some 80 miles to the west of Mt. Hagen on the mainland and estimated to contain in excess of 12 million oz of gold. It has been described as the most significant gold discovery in the world since World War II.

Grades and tonnages are reported as roughly 4.5 million tonnes averaging 21.9 g (0.70 oz) per tonne in the high grade zone 7 and some 76 million tonnes grading 3.7 g (0.12 oz) in the remainder of the deposit. The property also contains significant silver values.

Porgera is a joint venture of Placer Pacific, Mount Isa Mines and Renison Goldfields Cons. The property will likely be developed initially as an underground operation to exploit the deep high grade zone and will phase into an open pit operation. Production before the end of the decade appears likely.

The Misima property, owned by Placer Pacific, is due for a construction start early this year with dore production expected in 1988. The mine, situated in the southeast of Papua New Guinea, in the Milne Bay province, is forecast to produce some seven tonnes of gold and 70 tonnes of silver annually.

Not far from Misima, on Fergusson Island, an Esso/City Resources joint venture has identified a promising epithermal prospect at Wapolu containing easily accessible ore grading about 2 g gold per tonne. The joint venture is reported moving toward a feasibility stage. Free dendritic gold has been noted in this deposit.

Off the coast of the large island of New Ireland in the north of the country, a joint venture made up of Kennecott Explorations and Niugini Mining is making excellent progress in proving up reserves on its Lihir Island prospect. Published geological reserves are 137.2 million tonnes at 2.66 g gold per ton (almost 12 million oz of contained gold). It is expected these figures will increase when the results of recently-completed drilling are incorporated in reserves estimates.

The deposit is primarily a sulphide type with what is reported as complicated metallurgy. It occurs in a volcanic caldera which is still active geothermally. The joint venture’s experts and consultants are actively examining the metallurgical and mining problems associated with this unusual, highly promising deposit. Last year saw a turn-around for the beleaguered Ok Tedi gold- copper project from a mega-money sink to a viable operation with a bright future. In spite of generally lack-lustre gold prices, the mine is expected to record a net profit for the year and will continue with its phase II expansion to treat 45,000 tonnes of copper ore per day in 1987 to be followed by 70,000 tpd by 1989.

Mining and processing of the rich overlying gold capping will cease in early 1988 when these reserves will have been depleted. The transition to a viable copper operation (with high gold values in the concentrates) is being achieved through a combination of positive mine management, purchases of nearly- new equipment from closed U.S. mines (Carr Fork and Quintana) and the co-operation of the government of Papua New Guinea.

In addition to its already significant contributions to the cash economy of Papua New Guinea, Ok Tedi Mining is projected to provide an extra six million kina (1 kina = roughly $1) to the government in the form of royalties in 1987.

A major contributor to Papua New Guinea’s economy over the last 10 years or so has been Bougainville Copper. Its world-class mine on the island of Bougainville in the east of the country was expected to contribute 24 million kina to government revenues from taxation and royalties in 1986. The state as an approximate 20% shareholder also benefits from dividend payments.

Hard work, innovative engineering and sound management have enabled Bougainville to lower costs and boost production to retain its place as one of the world’s lowest unit-cost copper producers. The company’s new pre-concentrate system should produce a significant increase in recovery this year, further increasing profitability.

Bougainville’s copper concentrates carry significant gold values (up to 0.48 g/t) and are well sought after; demand is not likely to be affected by hypothesized surpluses in the world concentrate market. It is worthwhile noting that Ok Tedi’s copper concentrate will also be “clean,” with substantiual gold values to add to its value.`

In other developments on the mainland, Niugini announced its intention to develop a small gold prospect near Kainantu in Chimbu province. The Mount Victor gold mine will employ a second-hand mobile gold processing plant purchased from the Patricia gold mine in western Australia. This heralds the development of the first of what is hoped will prove to be many small- to medium-size prospects believed to exist in Papua New Guinea, representing excellent opportunities for small and junior miners. Mount Victor’s reserves are estimated as 314,000 tonnes at 4.6 g gold per tonne, with an expected mine life of about four years.

East of their Mount Victor prospect, in Morobe province near the old alluvial district of Aau and Bulolo, Renison Goldfields has reported excellent results from diamond drilling on its Kerimenge prospect.

The Esso/City Resources joint venture has been actively exploring on several fronts for alluvial deposits and has centred its operations on the old Olapai River alluvial area at its Lakekamu prospect some 120 km northwest of Port Moresby in the Gulf province. City has released figures that indicate a deposit estimated at some four million cu m of ground averaging about 0.3 g gold per cu m. It also has good expectations of its prospecting authorities in the Maprik region in the east Sepik province.

The Esso/City Resources joint venture also includes the Wild Dog prospect at Uramit on the Gazelle peninsula in the East New Britain province amongst its suite of prospecting authorities. With estimated geological reserves running at 250,000 tonnes at 5 g/t, including a 4-m intersection with gold values reported as high as 26.7 g/t from a vein structure which could extend up to 2 km in length, the prospect is indeed exciting. To the northwe st of the Lihir prospect, in the Tabar Islands, gold mineralization has been noted from exploration work conducted by a joint venture operated by Kennecott and including Nord Resources and Niugini Mining. Newmont and Pacific Arc continued exploring in the Tanga group while to the southeast the Esso/City Resources J.V. had encouraging results from the Feni Island deposit.

The year 1986 saw Papua New Guinea climb higher on the ladder of world gold producers with an estimated production of 36 tonnes (1.157 million oz). Of this total some 18 tonnes came from Ok Tedi, 16.3 tonnes was contained in copper concentrates of Bougainville Copper, 650 kilos came from the new treatment plant of New Guinea Gold Fields at Wau and the remainder was from small-scale miners. The year, it is fair to say, was a golden one for Papua New Guinea and 1987 is expected to reward the efforts of those involved with new discoveries, additions to reserves and construction commencing on at least two new gold mines, with the likelihood of others to come in 1988.

Mr Matthews is employed by Papua New Guinea’s department of minerals and energy.