PNG shareholders to get K25bil

AT a gold price of US$1,800 (about K6,800) per ounce, PNG shareholders would expect to receive nearly US$7.3 billion (K25.2 billion) over a potential 20-year life and US$2.8 billion (K9.7 billion) in the first 10 years.
According to a statement from New Porgera Limited (NPL), the benefit sharing terms agreed between the State, Barrick Niugini Limited (BNL), Kumul Mineral Holdings Limited (KMHL) and Mineral Resources Enga (MRE) to restart the mine ensure a transparent and fair distribution of the overall economic benefits that will be generated by Porgera over its projected 20-year mine life.
“Over the life of mine, PNG shareholders, comprising Porgera landowners, Enga province and the State (including KMHL which will hold the equity in new Porgera on behalf of the State), will receive 53 per cent of Porgera’s overall economic benefits.
“BNL will receive the remaining 47 per cent.
“Separately there have been reports in the media that NPL has selectively engaged individual clan members in discussions on compensation agreements and bypassed the Porgera Landowners Association.
“This is not true. NPL has not selected the landholder representatives with whom it is dealing.
“Rather, NPL is following the Government’s agency system that has been used for compensation payments since 1989, which has long been accepted by landholders.”
According to the statement released yesterday, the current gold price is significantly higher at approximately US$2,170 (about K8,180) per ounce.
“Importantly, BNL, the operator of NPL, has committed to financing the capital required to restart the mine.
“Furthermore, once the mine has restarted, any additional loans made by BNL or its affiliates to NPL will be on an interest-free basis.
“This means the State of PNG will never face a situation where it would be necessary to take out interest-bearing commercial loans to fund its portion of the capital needed for investment in the mine.
“During the period between when the mine ceased operations in April 2020 until the reopening on Dec 22, 2023, Barrick Niugini Limited has alone funded 100 per cent of the care and maintenance and preparatory restart costs totaling approximately US$677.6 million (K2.58 billion).
“The State, KMHL and BNL agreed that initially KHML’s dividends from NPL (as well as the dividends paid to the entity jointly owned by Barrick and China’s Zijin that holds shares in NPL) will be used to reimburse BNL for the care and maintenance and restart costs (other than some agreed non-recoverable costs).
“However, the PNG shareholders are not affected by this arrangement and will receive their dividends as they are declared following the start of operations.”
In addition, NPL will be a significant taxpayer, being subject to a 32 per cent corporate tax rate, in return for fiscal stability under the Resource Contracts Fiscal Stabilisation Act, and an increase in the royalty from 2 per cent to 3 per cent.
“The proportion of equity and economic benefits that belong to the landowners is also a first in PNG’s agreements with international investors.”