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Business |
Emperor sells 20% Porgera stake
Barrick Gold pays
K781million, owns 75% of mine
By BRIAN GOMEZ
Emperor Mines will be heavily cashed following sale of its 20%
stake in Porgera gold mine to Barrick Gold for US$250 million
(K781 million), a forced sale caused by severe problems related to
the closure and sale of its Fijian gold mine.
Emperor, which will have A$130 million in the bank and no debt
following completion of the transaction, has full ownership of the
recently troubled Tolukuma mine in Central province.
It also has 5,000 sq km of exploration tenements that is
understood to be highly prospective for copper and gold.
Emperor’s share rose A$0.03 to A$0.15 following the announcement.
The stock was suspended from March 26 to last Friday to progress
the Porgera sale.
Barrick presently has 75% of Porgera with 5% held by Mineral
Resources Enga (MRE).
The deal, in which MRE has pre-emptive rights, could see Barrick
regain ownership of 95% of the mine, which has total reserves of
9.4 million ounces of gold.
The Porgera stake has saved Emperor following its unsuccessful
foray into the Vatukoula mine in Fiji and recent problems at
Tolukuma mine, where operations were adversely affected by
temporary shutdowns in August and November last year.
The then relatively newly appointed general manager for Tolukuma
Brad Sampson was forced to shutdown the mine for several days over
safety issues last Aug 31.
According to the company’s half yearly report in February, “these
issues included access to underground mine egress, potential fire
risks in air flow intake systems and the absence of refuge
chambers or fresh air bases in parts of this area”.
Mining operations were temporarily halted because no alternate
stoping block was accessible for production.
The mill was restarted last Sept 2 and stock levels kept at above
600 tonnes of ore.
However, serious damage was later found to the semi-autogenous
grinding mill, leading to its shutdown from last Nov 25 to last
Dec 8.
As a result of these problems only 24,137 ounces of gold were
produced during the second half of last year.
Although production has improved this year, it is understood
Tolukuma is still not operating at previous levels and may not be
cash flow positive at this time.
In Friday’s announcement, Emperor said the effective date of the
Porgera transaction was April 1 but regulatory and other approvals
could take up to four months.
Emperor’s 78% parent, South Africa’s DRDGold, has agreed to
support the sale of the Porgera stake and will urge its
shareholders to vote in its favour.
DRDGold purchased the Porgera stake in 2003 for cash and shares
worth US$73.8 million as part of its growth strategy in the
Australasia region, later merging its PNG interests with the
ill-fated Emperor mine in Fiji.
In recent weeks, serious concerns have also been raised about
water quality levels in rivers near the Tolukuma mine, including
claims that heavy metal contamination could seriously affect the
health of villagers.
 
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