The National, Wednesday 08th Febuary 2012
BOUGAINVILLE Copper Ltd share prices spiked by 11% yesterday to A$0.80, its highest level in two months, following suggestions from European shareholders that a forthcoming cabinet visit to Arawa, near the Panguna mine site, could result in “good news”.
Bougainville Copper, listed as BOC on the Australian Stock Exchange, hit a high of A$1.20 in mid-September last year after speculation that positive decisions could be made on the mine, which was shut down in mid-1989 as a result of the Bougainville crisis.
As hopes for an early decision faded, the BOC share price took a steep plunge to A$0.80 by the end of last September.
It remained in a range of A$0.75 to A$0.90 from last October to mid-December and fell to a low of A$0.62 early last month before making a sharp rebound.
The share price rose by 13.64% to A$0.75 on Feb 2 and eased slightly to A$0.72 by Feb 6 before yesterday’s sharp rebound to A$0.80.
Optimism in the stock was generated in the early part of last year when Bougainville Copper’s chairman, Peter Taylor, told shareholders of the parent company, mining giant Rio Tinto Ltd, which had applied for exploration leases within PNG for the first time since the 1990s.
However, progress on discussions between the Autonomous Bougainville Government, Panguna landowners and other interested parties had been slow and shareholder enthusiasm faded in the meantime.
There was also some uncertainty whether the mining powers held by the National Government will be transferred to the Autonomous Bougainville Government prior to
any decision on a possible
opening of the mine, lead-
ing to further likely delays in decision making.
Industry sources said a high level of assurance on sovereign risk issues, including support of landowners and factions of the former Bougainville Revolutionary Army, would be necessary prior to any green light for development in view of the huge development costs estimated at around US$4 billion.
These deals, they said, would need to be in place even before the start of a pre-feasibility study which in itself could cost hundred million dollars.
The key differences anticipated from any new agreement, in contrast to the one initially negotiated by the former colonial government prior to independence, would be the flow of all royalties to the Panguna landowners with additional revenues flows targeted for the provincial and local governments.