Legacy investments fail to yield returns


The legacy investments that Kumul Mineral Holdings Ltd (KMHL) inherited from Petromin have failed to generate returns, chairman Peter Graham says.
“The board of Kumul Minerals has focused on dealing with these legacy investments, cleaning up the balance sheet, and preparing to invest in quality mining projects that will generate industry-competitive returns through the relevant commodity price cycles,” he told The National.
“After years of losses, Tolokuma gold mine was sold by previous management to a Singaporean company which then defaulted on payment of all but a small fraction of the sales price despite efforts by Kumul Minerals to recover the sales proceeds.
“The company went into receivership.” Graham said the National Executive Council (NEC) had also directed Petromin (then) to take up a 15 per cent interest in the Solwara 1 deep sea mining project as a “proof of concept” project and provided a State guarantee for a loan of US$120 million (K408mil) for this equity share.
“Nautilus Minerals Inc, the principal equity holder failed to raise its share of funding to complete the project and instead spent Petromin’s US$120 million (K408mil) (paid upfront) in lieu of making their own proportional contributions,” he said.
“This unusual arrangement was permitted by the joint venture agreement.
“Nautilus was wound up in 2019 leaving an incomplete project, and creditors receiving only cents in the dollar.
“Kumul Minerals’ application to the Canadian courts to be considered as a creditor was unsuccessful and Kumul Minerals has been left with a loan of US$120 million to be repaid by April 2021.
“Deepsea Mining Finance Ltd (a company owned by the two major shareholders of Nautilus Minerals Inc) subsequently acquired ownership and control of certain subsidiaries of Nautilus including those involved in the Solwara 1 project and is attempting to move the project forward.
“Kumul Minerals is working to remove exposure to financial, operational and reputational risks associated with Solwara 1.”
Graham added that KMHL holds a 17.4 per cent interest in Bougainville Copper Ltd, which was promised to Panguna landowners and Bougainvilleans by the previous government.
“A further 19.06 per cent is held in Treasury which was to transfer to Kumul Minerals as part of consolidating PNG’s mining interests in accordance with the Act,” he said.
“However, the future of these two tranches of shares will be decided by the Government in the context of the recent referendum.
“Kumul Minerals currently has no operating assets.
“Ok Tedi Mining Ltd, a profitable majority State-owned entity, has yet to transfer into Kumul Minerals pending resolution of exposures relating to Solwara 1.”
Meanwhile, Graham said Kumul Minerals expects to participate in future quality mining projects such as the Wafi-Golpu gold project in Morobe.


  • What?! Another K400 million? Everywhere we turn to seems a failure and complete opposite from the normal. Are we in control of our destiny?Another saga this poverty stricken nation is not fully aware.

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