Diversification – the Diversification – the Search for new Search for new

Minerals in Minerals in Papua New Guinea Papua New Guinea

Philip SamarActing Managing DirectorMineral Resources Authority

Cairns Mining ConferenceJune 12, 2013

IntroductionIntroduction Mineral dependant economy (60% total export Mineral dependant economy (60% total export

receipts 2010).receipts 2010). Average annual production - 60 tonnes Au, 70 tonnes Average annual production - 60 tonnes Au, 70 tonnes

Ag, 180,000 tonnes Cu.Ag, 180,000 tonnes Cu. Contribution from 3x large mines, 2x medium mines, Contribution from 3x large mines, 2x medium mines,

2x small mines and 100,000 artisanal miners.2x small mines and 100,000 artisanal miners. 5 Year portfolio - 4x large mines to commence 5 Year portfolio - 4x large mines to commence

production. Gold output ~80 tonnes by 2016.production. Gold output ~80 tonnes by 2016. Diversification of mineral base (Co, Ni, Mo, Coal).Diversification of mineral base (Co, Ni, Mo, Coal). US$15 billion LNG Gas investments (Exxon Mobil, US$15 billion LNG Gas investments (Exxon Mobil,

Interoil)Interoil) Government owned and operated mines (Tolukuma, Government owned and operated mines (Tolukuma,

Oktedi)Oktedi)

Operating MinesOperating Mines

1.1. Porgera (Barrick Gold)Porgera (Barrick Gold)2.2. Kainantu – on C&M (Barrick Gold)Kainantu – on C&M (Barrick Gold)3.3. Ok Tedi (PNG Govt)Ok Tedi (PNG Govt)4.4. Tolukuma (PNG Govt)Tolukuma (PNG Govt)5.5. Sinivit (New Guinea Gold)Sinivit (New Guinea Gold)6.6. Lihir (Newcrest)Lihir (Newcrest)7.7. Simberi (St Barbara)Simberi (St Barbara)8.8. Hidden Valley (Harmony/Newcrest JV)Hidden Valley (Harmony/Newcrest JV)9.9. Ramu – MCC (Chinese Government)Ramu – MCC (Chinese Government)

The Ramu Ni/Co mine commenced The Ramu Ni/Co mine commenced commissioning operations in January 2012 commissioning operations in January 2012 and is the latest addition.and is the latest addition.

2012 Actual Production 2012 Actual Production No.No. Mines Mines Gold (ozs)Gold (ozs) Silver (ozs)Silver (ozs) Copper (t)Copper (t)

11 PorgeraPorgera 440,300440,300 90,13090,130 --

22 KainantuKainantu C&MC&M C&MC&M --

33 Ok TediOk Tedi 405,730405,730 822,000822,000 125,349125,349

44 TolukumaTolukuma 21,43021,430 47,30047,300 --

55 SinivitSinivit 2,1342,134 1,5001,500 --

66 SimberiSimberi 56,67856,678 10,21410,214 --

77 LihirLihir 589,000589,000 -- --

88 Hidden Hidden ValleyValley

159,784159,784 1,643,0001,643,000 --

99 RamuRamu 4,700 tonnes (Ni)4,700 tonnes (Ni) 473 t (Co)473 t (Co) 3,630 (Cr)3,630 (Cr)

Total Total production:production:

1,675,0561,675,056 2,614,1442,614,144 125,349125,349

Mines under ApplicationMines under Application

No.No. Mines Mines OwnerOwner CommodityCommodity Start-Start-upup

Mine Mine LifeLife

11 WoodlarWoodlarkk

Kula GoldKula Gold Au – 100,000 Au – 100,000 ozsozs

20152015 9 yrs9 yrs

Kula Gold have submitted their FS and Kula Gold have submitted their FS and Application for a Mining Lease to the MRA and Application for a Mining Lease to the MRA and currently being assessed.currently being assessed. Mine Life – 9 yearsMine Life – 9 years Capital Cost ~ US$150 millionCapital Cost ~ US$150 million

Five Year Portfolio – Five Year Portfolio – World class projectsWorld class projects

NoNo Mines Mines OwnerOwner Resource Resource EstimationEstimation

CommodityCommodity Start-Start-upup

MinelifeMinelife

11 Solwara1Solwara1 Nautilus Nautilus Minerals Minerals

2.2 Mt @6.8% Cu, 5 2.2 Mt @6.8% Cu, 5 g/t Au, 23 g/t g/t Au, 23 g/t Ag, 0.4% ZnAg, 0.4% Zn

Au – 250,000 Au – 250,000 ozsozs

Ag – 50,000 ozsAg – 50,000 ozsCu – 100,000 tCu – 100,000 t

20152015+5 yrs+5 yrs

22 Yandera Yandera Marengo Marengo Mining LtdMining Ltd

600 Mt @0.48% Cu 600 Mt @0.48% Cu Eqv.Eqv.

Cu – 82,000 tCu – 82,000 tMo – 6,700 tMo – 6,700 t

20172017+20 yrs+20 yrs

33 Mt KareMt Kare IndochineIndochine 28 Mt @1.9g/t Au, 22.5g/t Ag

Au – 120,000 Au – 120,000 ozsozs

Ag – 700,000 Ag – 700,000 ozsozs

20172017+10 yrs+10 yrs

44 Frieda Frieda GlencoreGlencore 1.9 billion 1.9 billion tonnes @0.45% Cutonnes @0.45% Cu

Cu – 190,000 tCu – 190,000 tAu – 280,000 Au – 280,000

ozsozs

20192019+20 yrs+20 yrs

55 Wafi/GolpuWafi/Golpu Harmony/Harmony/Newcrest JVNewcrest JV

1 billion tonnes, 9 1 billion tonnes, 9 Mt Cu, 26Moz- AuMt Cu, 26Moz- Au

Cu – 400,000 tCu – 400,000 tAu – 500,000 Au – 500,000

ozsozs

20182018+30 yrs+30 yrs

1. Mt Kare1. Mt Kare

Owned and Operated by IndochineOwned and Operated by Indochine 1 Moz gold potential and 8Moz 1 Moz gold potential and 8Moz

silversilver Currently undergoing Feasibility Currently undergoing Feasibility

Study for completion Dec 2013. Study for completion Dec 2013. LIS is key.LIS is key.

Projected mine life of 8 yearsProjected mine life of 8 years Commercial Production – 2016Commercial Production – 2016 Annual Production: Au – 120,000 Annual Production: Au – 120,000

ozs, Ag - 1 Mozs ozs, Ag - 1 Mozs

2. Yandera 2. Yandera

• Marengo Mining Ltd is the developer of the Yandera project located in Madang Province

• Current reserves of 500Mt • Bankable Feasibility Study to be

completed in 2013• Mine life expected to be 20 plus years• Producing Copper and Molybdenum• Production expected in 2017

3. Frieda Copper 3. Frieda Copper

• Glencore is the new owner of the project located at the border of Sandaun and East Sepik Provinces

• current reserve of 7.5 million ounces of gold and 14.3 million tonnes of copper and collectively forms one of the world’s largest undeveloped copper and gold deposits.

• Definitive Feasibility Study to be completed in 2013 with mine life of 20 plus years.

• Production anticipated in 2019

4. Wafi-Golpu 4. Wafi-Golpu

• The Wafi-Golpu exploration project is a joint The Wafi-Golpu exploration project is a joint venture (50-50 percent stake) between Harmony venture (50-50 percent stake) between Harmony Gold of South Africa and Newcrest of Australia.Gold of South Africa and Newcrest of Australia.

• The Wafi-Golpu project has current resource The Wafi-Golpu project has current resource estimate of 9 million tonnes of copper and 26.6 estimate of 9 million tonnes of copper and 26.6 million ounces of gold with Gold equivalent of million ounces of gold with Gold equivalent of 74million ounces and forms one of the world’s 74million ounces and forms one of the world’s major gold deposits. Current indications are that major gold deposits. Current indications are that this project has the potential to be another Ok this project has the potential to be another Ok Tedi or Panguna sized operation with an Tedi or Panguna sized operation with an expected Mine life of 20 plus yearsexpected Mine life of 20 plus years

• Pre-Feasibility Study competed and presented to Pre-Feasibility Study competed and presented to governmentgovernment

Wafi-Golpu cont’dWafi-Golpu cont’d

• Feasibility Studies to commence in the third quarter of 2013 and delivered in 2014 and production expected in 2019.

• The PFS proposes that the Golpu deposit be mined via a large, long life, deep underground mine using the block caving method, first in PNG for such operation.

• Community Participation Agreement (CPA)program rolled out involving the 16 communities of Wafi Golpu. About 80% complete.

• Government allocation of K1.5million as Business Development Grant to be utilized for CPA

Focus on Focus on DiversificationDiversification PNG has traditionally been a Gold, PNG has traditionally been a Gold,

Copper & Silver producer.Copper & Silver producer. Strong focus now on diversification into :Strong focus now on diversification into : - Nickel & Cobalt (Ramu mine)- Nickel & Cobalt (Ramu mine)

- Chromite/Iron (Beach Sands FS)- Chromite/Iron (Beach Sands FS)- Molybdenum (Yandera project)- Molybdenum (Yandera project)- Industrial Minerals- Industrial Minerals- Coal (new EL applications)- Coal (new EL applications)- Rare Earths (PPP option)- Rare Earths (PPP option)

Licences Key

142° 144° 146°

Current Exploration Licence

Exploration Licence Under Renewal

Ministerial Reserve

WESTERN

SOUTHERN HIGHLANDS

MADANG

Exploration LicenceUnder Application

0 100 200 km

WEST SEPIKEAST SEPIK MANUS

EASTERN HIG HLANDS

GULF

P A P U A N E W G U I N E A

WESTERNHIG HLANDS

ENGA

148°142° 144° 146° 150° 152° 154° 156°

WEST NEW BRITAIN

ORO

EAST NEW BRITAIN

NORTH

SOLOMONS

MOROBE

CHIMBU

E x p l o r a t i o n L i c e n c e s t o J u l y , 2 0 1 0

148° 150° 152° 154° 156°

CENTRAL

2°

4°

6°

NEW IRELAND

MILNE BAY

12°

10°

8°

17811702

13121392

1682

1436

1708

15741624

1441

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151915321531

1594

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1279

13871389

1516

1769

7a

4

567b

23 1

1539

COAL

Iron Sands

Rare Earths

Nickel/Cobalt

Iron Sands

COAL

Offshore

Institutional ReformsInstitutional Reforms Review of Fiscal Regime for mining Review of Fiscal Regime for mining

exploration & development in 2001.exploration & development in 2001. Set up of Mineral Resources Authority (MRA) Set up of Mineral Resources Authority (MRA)

to better regulate, administer and promote to better regulate, administer and promote PNG’s mining industry.PNG’s mining industry.

Set up of Dept of Mineral Policy to develop Set up of Dept of Mineral Policy to develop government policies on mining industry.government policies on mining industry.

EU Sysmin TA – Improved Geological EU Sysmin TA – Improved Geological mappingmapping

World Bank TA – institutional strengthening.World Bank TA – institutional strengthening. Recruitment of specialist skills setsRecruitment of specialist skills sets

Porgera mine

Preliminary Results – Area 1

Proposed Legislative & Proposed Legislative & Policy Reforms Policy Reforms ONLINE TENEMENT APPLICATIONS AND APPROVALS PROCESSING.ONLINE TENEMENT APPLICATIONS AND APPROVALS PROCESSING. INCREASE TENURE OF EXPLORATION LICENCES FOR A 3 YEAR INCREASE TENURE OF EXPLORATION LICENCES FOR A 3 YEAR

TERM OR UP TO A 5 YEAR TERM DEPENDING ON THE NATURE OF TERM OR UP TO A 5 YEAR TERM DEPENDING ON THE NATURE OF EXPLORATION AND CIRCUMSTANCES SURROUNDING EACH EXPLORATION AND CIRCUMSTANCES SURROUNDING EACH APPLICATION.APPLICATION.

MERGING OF THE SPECIAL MINING LEASE (SML) AND A MINING MERGING OF THE SPECIAL MINING LEASE (SML) AND A MINING LEASE (ML) TO FORM A SINGLE MINING LEASE WITH THE LEASE (ML) TO FORM A SINGLE MINING LEASE WITH THE DISTINCTIONS CAPTURED THROUGH THE MINING DEVELOPMENT DISTINCTIONS CAPTURED THROUGH THE MINING DEVELOPMENT CONTRACTS.CONTRACTS.

MINING RETENTION LICENCE TO ENABLE DEVELOPERS TO APPLY MINING RETENTION LICENCE TO ENABLE DEVELOPERS TO APPLY FOR LAND THAT IS NECESSARY FOR RETENTION FOR THEIR FOR LAND THAT IS NECESSARY FOR RETENTION FOR THEIR SPECIFIC PURPOSES.SPECIFIC PURPOSES.

FAST TRACKING THE APPROVALS PROCESS FOR TENEMENT FAST TRACKING THE APPROVALS PROCESS FOR TENEMENT APPLICATIONS WITH SPECIFIED TIME FRAMES TO BE APPLICATIONS WITH SPECIFIED TIME FRAMES TO BE INTERNATIONALLY COMPETITIVE AND ATTRACTIVE.INTERNATIONALLY COMPETITIVE AND ATTRACTIVE.

STATE EQUITY PARTICIPATION - TO REALIGN THE GOVERNMENT STATE EQUITY PARTICIPATION - TO REALIGN THE GOVERNMENT NOMINATION OF PETROMIN AS THE STATE’S NOMINEE TO TAKE NOMINATION OF PETROMIN AS THE STATE’S NOMINEE TO TAKE UP TO 30% STAKE IN ANY MINING DEVELOPMENT PROJECT IN UP TO 30% STAKE IN ANY MINING DEVELOPMENT PROJECT IN PNG.PNG.

Other Sectoral Other Sectoral Developments…Developments… LNG Gas development (US$10 LNG Gas development (US$10

billion)billion) Geothermal mapping and analysis Geothermal mapping and analysis

- Alternative Energy sources to - Alternative Energy sources to power mining operations.power mining operations.

Transport & Infrastructure – Govt Transport & Infrastructure – Govt plan to upgrade facilities.plan to upgrade facilities.

Challenges…Challenges…

Sustainable outcomes from mine derived Sustainable outcomes from mine derived benefits for stakeholder benefits for stakeholder (State/Landowners/Company).(State/Landowners/Company).

Better management of social issues that Better management of social issues that affect mine operations.affect mine operations.

Provision of essential social services.Provision of essential social services. Ensuring more clarity and transparency Ensuring more clarity and transparency

in existing & proposed mining policies in existing & proposed mining policies (current review of legislation & policies).(current review of legislation & policies).

www.mra.gov.pg