HISTORICAL OVERVIEW OF MINING IN PNG

Trevor Neale Melanesian Resources

Papua New Guineans have been mining GERMAN A

and manufacturing stone implements, E

NEW GUINEA Rabaul N harvesting oil seeps and using clay for I

pottery for about 40,000 years, however U G

metals never became part of the W

indigenous culture. The first reported E N traces of gold were from pottery

collected in Redscar Bay to the west of H C

Port Moresby in 1852. An expedition T

to find the source of this gold in 1855 U D failed when the ship carrying the prospectors was wrecked on the Great Barrier Reef off the Queensland coast. BRITISH The 1800s was a period of rapid colonial expansion by European powers and in the Pacific this mainly involved Early colonies - circa 1885 Britain, Germany and France with the Netherlands active in southern Asia. In annexation of the remaining southern mining industry. It was the hope of 1828, fearing British intentions, the half of the island as the British discovering riches in unexplored lands western half of the island of New Protectorate of New Guinea (British that "opened up" much of the land Guinea (west of 141˚ longitude) was New Guinea). The boundary between interior. The miners and missionaries claimed by the Governor of the the two possessions was finalised in often went first and the administration Maluccas, Pieter Merkus, for the April 1885. and development followed. PNG has Netherlands (Dutch New Guinea). In suffered the same "boom and bust" The British proclamation contained an 1875, the Netherlands Government times in mining as experienced by many interesting statement "that all purchase defined its 1828 claim by fixing 140˚ other countries. There have been of land from the natives by white men is 47’ east as its eastern boundary. periods of intense activity, driven by the absolutely prohibited". This was to hope of striking it rich in new lands and Various proclamations by British have a long lasting impact on the by changing commodity prices, officers taking possession of the eastern development of the colony and followed by periods of little or no portion of New Guinea (Lieutenant ultimately on the Independent State of activity. The various phases of mining C.B. Yule, at Cape Possession in 1846 . This was, in fact, development, which have occurred and Captain Moresby at Hayter Island recognition of the indigenous land during the past 120 years, are outlined in 1873) were not acknowledged by the rights of the inhabitants of the below. British Government. A claim in 1880 possession and PNG remains almost by the Marquis de Rays to the whole of unique in the developing world in that Pre-Colonisation New Guinea and adjacent islands its indigenous people retain ownership Several expeditions occurred prior to outside the Dutch possession for his free of 97% of their original land. The other colonisation. The most notable was a colony of Nouvelle France received no 3% is owned by the State. This simple rush in 1878 to the Laloki River near international recognition. In 1883, statement in 1884 set the underlying Port Moresby following the discovery of Queensland, then a British colony, premise for the drafting of all laws in the flakes of gold by Andrew Goldie, a attempted to secure the territory of New country, including laws relating to storekeeper and trader of Port Moresby. Guinea outside the Dutch possession by resources. The recognition of The rush soon failed due to the lack of proclaiming British sovereignty over the indigenous land rights in German New gold and many of the miners died of land between 141˚ and 155˚. This Guinea was introduced by the malaria. In 1876 Luigi d’Albertis, action was repudiated by the British Australian administration in 1921 when together with aviation pioneer Lawrence Government. the former German colony became a Mandated Territory under the League of Hargraves, navigated up the in During 1884, Germany annexed the Nations after the First World War. a steam launch and found a speck of northern half of the eastern side of the gold and a specimen of copper at the island (German New Guinea) and this The development of PNG as a nation is upper most point of their expedition in was quickly followed by Britain’s closely tied to the development of the the lower above its

1 confluence with the Fly River (D’Albertis junction) about 90km directly south of the present day Ok GERMAN Tedi mine. NEW GUINEA

Rabaul A

1887 to 1914 E

N I

Most of the mining activity during this U

G

FLY RIVER 1894

period was in British New Guinea later W 1898

E N

renamed Papua, as the British, then H

C 1910 Australian administration from 1905, T

U WARIA 1900 saw gold mining as a valuable source of D LAKEKAMU GIRA 1898 revenue. The German administration 1909 WOODLARK 1898 (Neuguinea-Kompagnie) in German YODDA New Guinea was more focused on ASTROLABE 1906 1900 BRITISH MILNE BAY MISIMA 1889 commercial agriculture and scientific NEW GUINEA KEVERI Samarai 1899 1904 endeavours than prospecting and as a (PAPUA after 1905) FROM PALMER GOLDFIELD SUDEST 1888 result, there was little mining activity. Pre-World War I discoveries The first significant gold discovery in Papua was made on Sudest Island, from those times is still told in the area these alluvial gold rushes as short term Milne Bay in 1888 by David Whyte today. "We eat boots". The local people and transient and sought to develop a who returned to Cooktown in North were not aware that a man’s shoes were more permanent industry. Queensland with over 142oz. Gold on not part of his body and they smoked the Palmer goldfield to the west of and cooked his boots until they In 1893, the Caledonian reef was found Cooktown was getting hard to find and consumed them. at the western end of Sudest Island but a rush to Sudest soon followed with 200 was soon abandoned. In the same year miners on the field by end of 1888 and As the fields became worked out or gold the Mt Adelaide lode was discovered in 400 a year later. The gold on Sudest was became difficult to find, the miners the centre of the island and by 1896 the easily won by ground sluicing however continued their search westward. Often British New Guinea Gold Pty Ltd had this required permanent supplies of syndicates, funded by local commenced development of the first water. The distinct wet and dry season businessmen, would undertake underground mining operation and on the island soon caused miners to seek expeditions into unexplored lands. installed a 10 head stamp battery. Ore riches elsewhere. Other times, well-off miners would crushing commenced in September sneak off to find a new field for William McGregor (later Sir William), 1897 however a cyclone in April 1899 themselves. At this time, the the British Administrator, used HMS caused permanent closure of the administration offered reward claims for Swinger to transport miners wanting to operations. the discovery of new fields and this was prospect on nearby islands and by 1889 an important incentive for miners and The hardrock source for the alluvial gold had been found on Misima. In financiers alike. gold on Misima (Umuna Lode) was 1895, when word reached the miners on found in 1904 and a succession of that Lobb and Ede, The westward exploration found the syndicates and companies attempted traders and prospectors, had won a ‘half Keveri goldfield in 1904 but this field mining of the lode but only a few of billy can’ of gold from a creek on proved to be small. The Astrolabe them were financially successful. another gold rush mineral field (copper) was found in Between 1910 and 1912, St Aignan ensued. The Murua goldfield was 1906 and by 1909 the Lakekamu Mining Company operated a declared that year and by 1897, 400 goldfield had been found to the west of cynanidation plant. Pacific Island miners were working, but that number Port Moresby. The Lakekamu was the Mines installed an eight mile railway soon dwindled to 160 by 1898 as the first major find since the Gira and a easy, shallow gold was worked out and major rush followed. Dysentery and line at the cost of £30,000 and in 1917, malaria took its toll. malaria killed many but the field was Block 10 Misima Gold Mines owned by able to support a considerable number BHP took over the operations and The miners then moved from the of miners even though the supply line continued until 1921 when it closed islands to the mainland and began to was long and the costs were high. The and laid off 40 whites and 400 national prospect the Papuan peninsular. By first engagement between Australians labourers. This was the only operation 1900, the Mambare, Gira, Yodda and and the Germans after the outbreak of to continue after the commencement of Papua Waria fields had been discovered. World War 1 occurred near the World War 1. The Gira field was the site of intense British/German border on the conflict between the miners and the Lakekamu field. By the early 1900s, underground local people and many miners were operations had also commenced on killed (and eaten). One famous story The administration in Papua viewed Woodlark Island (Kulumadau, followed

2 by Boniavat and Busai) and at Laloki and Dubuna for copper on the TABAR Astrolabe mineral field. MANDATED TERRITORY OF In German New Guinea, Earnest A NEW GUINEA Rabaul Tappenbeck discovered gold in the E

N 1937 I

lower Ramu River in 1898 and a U PORGERA G

German syndicate worked gold in the 1938 W

Waria River from 1901 to 1904. Some E KUTA 1933 BENA BENA

N KIETA 1933

Australian prospectors entered the H 1924 C

Waria valley from Papua with the T MOROBE 1923 U blessing of the German Administration, D although this area was reserved for the Rudolf Wahlen syndicate. In 1910, a Canadian-Australian, Arthur Darling Port Moresby identified gold in what became the TERRITORY OF Samarai Morobe goldfield. PAPUA All mining operations in German New Guinea ceased during WWI and during World War I to World War II discoveries the period of military administration (1914 to 1921). underground, transported by overhead operation changed hands several times cableway then a tramway to a smelter at in the period to 1942 (New Misima 1922 to 1942 Bootless Bay. The mine operated from Gold Mines, Misima Gold Mine, 1922 to 1926 when it closed due to Cuthberts Misima Mines). All were Most of the mining activities during this operational difficulties. This mine was profitable and returned good dividends period were focused in the Mandated very important as it provided the only to shareholders. On Sudest, Territory of New Guinea (former source of copper for at the underground mining resumed briefly in German New Guinea) at Wau and time apart from the Burra mine in 1935 at Cornucopia near the old Mt Bulolo although mining activities South Australia. It is important to note Adelaide mine. recommenced at Misima and Laloki that Mt Isa, which became Australia’s (Papua) after the war. The New Guinea The end of military administration in major copper producer, was yet to be Administration, based in Rabaul, 1921 and a new Mining Act for New discovered. derived significant revenues from gold Guinea in 1923 led to a rush of mining whereas Papua was poor by At Misima, the Block 10 operation exploration activity in the Mandated comparison. which closed in 1921 was purchased by Territory which had previously been the Massive Samarai Syndicate and closed to Australian prospectors. Laloki, near Port Moresby, was the first between 1922 and 1928 produced post war mine to be developed. High Shark-eye Park relocated Arthur about 13,000 ounces of gold. The grade copper ore was mined Darling’s alluvial gold find in Koranga Creek near Wau in 1922 and worked it secretly until 1923 when the new Mining Act came into force. News of the discovery initiated the first small rush, however it was not until 1926 when rich alluvial gold was discovered at Edie Creek by William Royal and Dick Glasson that activities commenced in earnest. Within six months there were 500 expatriates and 1,500 labours on the field with some miners winning up to 240 ounces per day. Over 100,000oz was produced in the first year.

There was much controversy over the granting of the Edie Creek leases to the Big Six Syndicate formed by those connected to the initial discovery and a Royal Commission was established. The Commission found in favour of the Administration and the Big Six Syndicate retained their leases. Stamp battery used at Mt Adelaide mine, Sudest Island, 1897 - 1899 Hardrock deposits at Edie Creek were

3 discovered in 1927 and in the same year the Big Six Syndicate sold their leases to Ellyou Corporation (Leslie Urquart) of MANDATED TERRITORY OF London for £500,000. Following the

A NEW GUINEA consolidation of many leases in the E

N Wau-Edie Creek area, New Guinea I

U Goldfields (NGG) was floated on the G

Australian Stock Exchange in 1928 to W E raise £4.5 million. This was the largest N KUPAI

KAINANTU

H capital raising by any company to that C

T WAU time and was the start of mining U EDIE CREEK D company operations in New Guinea.

WOODLARK NGG developed an underground mine LALOKI on the four main lodes at Edie Creek via MILNE BAY five shafts (Edie 1-4 and Karuka). The MISIMA , TERRITORY OF main haulage shaft was No.4 which was PAPUA SUDEST 150m deep. Operations commenced on 1 January 1936 and ceased in 1941 due Hardrock mines 1930s to 1942 to a strike that resulted in flooding of the workings. Over 200,000 tonnes of ore with a head grade 11.7g/t Au and 257g/t Ag was treated using a 20 head stamp battery and batch cyanide tanks. 1,926kg of gold and 7,947kg of silver were recovered.

Underground and processing operations were also developed at Golden Ridges near Wau by NGG. A 14 kilometre road from Wau to Edie Creek was hand excavated and a 10 kilometre power line was installed to service the Edie Creek operations. This infrastructure is still in use today.

Cecil Levine, a former government patrol officer, recognised the dredging potential of the Bulolo flats which lay downstream of the Wau and Edie Creek deposits and floated Guinea Gold NL Big Six syndicate camp at Edie Creek, 1927 on the euphoria created by the Edie Creek discovery.

Guinea Gold optioned its properties to several groups before concluding a deal with Placer Development which at the time was newly listed on the Vancouver Stock Exchange. Bulolo Gold Dredging Pty Ltd (BGD) was established as the operating company and Bulolo became the first major mining project for Placer.

Eight section alised bucket line dredges, some of which weighed up to 4000 deadweight tonnes were flown from the coastal port of Lae to Bulolo by Junker Aircraft. This was a major logistical exercise and during 1930–1931 more airfreight was moved to Wau/Bulolo than in the rest of the world combined. At the time New Guinea was the world’s Sluicing on Chapman’s claim at Bulolo, circa 1932 major centre of aviation, a mode of

4 transport which was to become important to the exploration and development of the Territory as a whole as there were simply no roads anywhere. The other transportation alternative was walking.

Dredging operations commenced in 1932 and in the ten years to 1942, BGD produced 1.3 million ounces of gold. Peak production was achieved in 1940 when 185,000oz was recovered. The Bulolo operations were highly profitable and shareholders were well rewarded.

The entire Morobe goldfield reached its peak production in 1938 when 700 expatriates and 6,218 national labourers produced 404,000oz. Transporting dredge components by air, 1932 The significant mining activities in the Wau-Bulolo district prompted operations after the war. caused by the war. exploration into the unknown regions in the centre of the mainland. The The Australian Government evacuated Placer concluded in 1950 that dredging Leahy Brothers patrol in 1933 to the all the miners from Misima in 1942 due would cease in about 15 years and highlands was the most famous. This to the presence of Japanese forces in Lae undertook vigorous exploration expedition, which was part-sponsored and Salamaua. Nearly 700 national throughout the country. It prospected by NGG, discovered gold at Bena Bena, workers were stranded but were later Porgera in 1948 but concluded that the near Kainantu in Eastern Highlands, rescued by missionaries and returned to country was unsuitable for dredging and and at Kuta in the Western Highlands. their homes on other islands within evaluated the Lakekamu and many By 1937, gold had been found in the Milne Bay. other locations without locating suitable Sepik and a goldfield proclaimed. dredging ground. At Laloki, a mining and sintering Jim Taylor and John Black’s Hagen- operation by Mandated Alluvials The dredging operations at Wau-Bulolo Sepik patrol in 1938-39 found "big suffered the same destruction at the finally ceased in 1966. Prior to the rough edged flat colours in every dish" hands of the Allied Forces as did the closure of the mining operations, BGD down stream of Porgera and Black Wau and Bulolo operations. in partnership with the Australian noted that it was the "best prospect I Government commenced a major have seen"[on this patrol]. There was to By mid 1942 all mining operations in plywood and timber operation which be no activity at Porgera to follow this Papua and in New Guinea were closed. survives to this day as PNG Forest up for another 10 years. Products. This provided a sustainable Exploration was also happening in the 1948 to 1965 outcome for the community in Bulolo New Guinea islands. In 1924, gold was The rebuilding of mining operations which were affected by the closure of the discovered at Kupei on Bougainville, after WWII was difficult because of the mining operations. and a small operation was developed lack of supplies and equipment, NGG at Wau was much slower to which continued until the Japanese manpower shortages and of course, the rebuild their operations and was not invasion in 1941. Gold was also found scorched earth policy adopted by the fully operational until 1949. The Edie in the Tabar Group of islands although Allied Forces. Only the major mines at Creek plant, which was not destroyed activity was small. Wau and Bulolo were reconstructed during the war, was relocated to Wau. after the war. The fighting ended the The war provided a road from Lae to Operations at both Wau and Bulolo many small and medium scale mining Bulolo and Wau and road transport ceased in January 1942 when the Bulolo operations which were scattered became the major method of supply so airstrip was bombed by the Japanese. throughout the country. the use of aircraft for the transport of All expatriate personnel were evacuated equipment declined greatly. The great but the 3,000 or so national workers BDG was the first to get operational aviation era was over. Underground were abandoned and left to fend for after the war. The first dredges began mining was the main stay of the operating again in 1948 with the last themselves. Allied forces adopted a operations at Wau until the 1960s when scorched earth policy and destroyed rebuilt dredge being recommissioned in open cut mining was commenced. most of the infrastructure to prevent it 1951. The rebuilding effort was assisted falling into enemy hands. This policy by compensation received from the In 1948, Joe Searson applied for seriously impaired the restart of Australian Government for the damages dredging and sluicing claims at Porgera

5 and commenced alluvial mining. Gold geological sheets. Many a government was discovered at Kumbruf near Simbai geologist received free beers from the in in 1954 by a company geologists to get that latest government patrol and worked in a information from the bush. This first small way until the late 1960s. phase of exploration was focused mostly on base metals (porphyry copper, nickel, Several attempts were made to reopen etc) and resulted in the discovery of Misima operations between 1945 and copper porphyries at Yandera in the 1949 but all were short lived and Madang Province (1962), Panguna on unsuccessful. CRA looked at Misima in Bougainville (1964), Frieda (1967), 1949 but decided it was not of interest Wanum (1967), Ok Tedi (1968), and at the time. Small developments were nickel at Marum (Ramu) (1962), Wowo undertaken in the Kainantu district Gap and Lake Trist, and chromite at during the 1960s at Mt Victor/Clarkes Ridge and Kathnell. Morobe.

By 1966, the only operating mine in Panguna was brought into production the country was the NGG operations in 1972 in the period leading up to at Wau. Independence and was associated with a growing level of nationalism. This was 1966 to 1979 the first new mine developed in New Guinea for 40 years. The large profits Dredge bucket line, circa 1960 The first phase of modern exploration generated by the Panguna mine for commenced in the late 1960s with the Bougainville Copper, in which the Australian Bureau of Mineral Resources Government held a 20% equity interest, Tedi and an air of uncertainty (BMR) promoting exploration and caused mistrust by the Government and descended on the mining sector. In initiating regional geological surveys. resulted in the imposition of an excess October 1976, BHP farmed into the Many international companies began profits tax in 1974. This changing of Ok Tedi project and completed a two major regional exploration programs at the "goal posts" frightened many of the year feasibility study in 1979. the same time. One of the first was the international mining companies as CRAEstar program undertaken by At Porgera, Searson approached several CRA. many were still recovering from nationalisation of their copper assets in companies during the 1960s to test the Concurrently with the company Chile. In 1975, Kennecott withdrew hardrock potential. CRA looked in exploration efforts, the Government was from PNG when it failed to reach 1964 and Mt Isa Mines (MIM) showed conducting regional mapping and agreement with the new PNG interest in 1967 and then pegged the producing the first of the 250,000 Government on the development of Ok area surrounding Searson. Searson

No.5 dredge in operation, 1960

6 reached agreement with Anaconda in Department of Minerals and Energy up with the commencement of open 1969 to drive two adits then sold out to and resulted in a moratorium on new pit mining. MIM in 1971 and drill testing of the applications. When the moratorium Waruwari hardrock resource was lifted in November 1982, new The lifting of the moratorium in 1982 commenced. In 1975, Placer entered applications flooded in from allowed the Kennecott/Niugini Mining into a joint venture with MIM and international companies such as the joint venture to apply for an exploration continued drilling. NGG (later to Niugini Mining/Kennecott joint licence covering Lihir which they had become Renison Goldfields venture, CRA, and RGC, as well as earlier investigated while assessing the Consolidated known as RGC) joined from junior companies. The new gold Tabar Group to the north-west in joint the joint venture in 1979 and brought rush had begun. venture with Nord Resources. funds and metallurgical expertise to the Much of the sampling conducted Lihir was a new style of deposit for now three-way joint venture (one third PNG and enthusiasm was high for the each). The State had an option to during the 1970s did not include gold; so the race was on to find the obvious success of this world class deposit. acquire at sunk cost up to 10% of the Sampling and drilling to 1985 project if developed. deposits based on newly developed geological models. This was a period of delineated the Coastal and Lienetz At Frieda, MIM explored and drilled extensive grass roots exploration and zones, however the initial feasibility the porphyry copper system and by discovery. study on these zones, which were 1979 had located the higher grade Nena geothermally hot and refractory and required a high strip ratio, showed mineralisation. New deposits were found at Zone VII- Porgera (1982), Lihir (1983), Wapolu mining was not viable. Continued In the islands, there was intermittent (1983), Wild Dog (1984), Tolukuma exploration identified the Minifie zone exploration on Woodlark Island. CRA (1985), Kerimenge, Hamata (1986), which had higher gold grades, better explored for gold from 1967 to 1971 Wafi - gold (1986), Hidden Valley metallurgy, lower geothermal then withdrew and BHP commenced (1987), Mt Kare (1988), Simberi, and temperatures and lower strip ratio. By exploration in 1978 and from 1981 Golpu - copper (1990) - see map on the end of 1989, a massive drill out of continued under a joint venture with page 2. these zones had been completed and in Nord Resources. At Misima, various 1992 a new positive feasibility study was A significant number of mine groups explored for porphyry copper produced. developments also occurred during this style mineralisation up to the early period. First off the rank was Ok Tedi Activities continued at Frieda and in 1970s. In 1976, Peter Macnab acquired followed by Upper Ridges at Wau, Mt 1979, CRA and Norddeutsche Affinerie a licence over the area of the Umuna Victor near Kainantu, Misima and joined the venture, and two separate Lode and in 1977 farmed out the finally Porgera. Unfortunately during feasibility studies were completed in property to Placer (PNG) Pty Ltd which the same period, Panguna was forced to 1981 and 1985. carried out intensive drilling of the close due to civil unrest. Mt Victor and Umuna Lode for the next 10 years. Upper Ridges both closed in 1990 when RGC purchased NGG in 1982 and began detailed evaluation of the Wau By the end of the 1970s, exploration reserves were exhausted. district tenements as well as a regional was at a low ebb. Most operators were Construction of the massive Ok Tedi reconnaissance which led to the conducting programs just to maintain project commenced in 1981 with the discovery of the Kerimenge deposit in their properties. The NGG mine at development of the gold circuit which 1983 and the Hamata deposit in 1987. Wau was struggling however began production in 1984. Copper At the same time, CRA began Bougainville Copper’s operation at production commenced in 1987. This evaluation of the region to the south of Panguna was performing well. The was a mammoth engineering feat as Ok RGC’s Wau holdings and discovered the feasibility study on Ok Tedi had been Tedi is located in the headwaters of the Hidden Valley deposit in 1985. completed and was being reviewed. The Fly River, 800km from the coast in an industry was marking time. area which receives some of the world’s RGC continued to mine oxide ore from highest rainfall. the Wau mine until July 1985 while 1980 to 1991 constructing a new Upper Ridges CIP When gold prices increased significantly The discovery of the rich Zone VII at mill which was commissioned in in 1980, international miners once Porgera in late 1982 finally changed the January 1986. The Wau mine closed in again focused their attention on PNG economics of this project after more 1990 after 63 years of operation and all based mostly on the country’s past gold than 10 years of work. A development plant and machinery sold. production and its perceived high proposal was put to the Government in prospectivity. This confidence was to be 1988, the Special Mining Lease was Exploration by RGC in the Kainantu well rewarded. The second phase of issued in May 1989 and construction area identified a number of interesting modern exploration had started. commenced in June 1989. By 1990, prospects including Arakompa, however underground mining of Zone VII had RGC’s focus on the Porgera In 1980, Esso (PNG) Inc. applied for commenced and in the following year development led to these properties vast exploration areas throughout the produced over 1.2 million ounces. being farmed out to Highlands Gold in country, which overwhelmed the In 1994, the operation was ramped 1989. Landowner disputes delayed

7 CRA continued exploration during the gold rush, and reached an agreement with the Government to develop a helicopter-supported, mechanised alluvial gold mining operation. In 1991, a group of armed combatants entered the CRA operation at night and burnt part of the camp and other facilities. CRA activities ceased, and by 1993 the company had relinquished its rights to the exploration and alluvial mining tenements.

Niugini Mining commissioned the small Mt Victor mine in 1987, however reserves were soon exhausted and the mine closed in February 1990.

The prospect of copper exports doubling from 1987 when Ok Tedi came on stream was never realised as the production from Panguna ceased in 1989 simultaneously with the growing production from Ok Tedi. Gold production made its greatest growth since the 1930s with the development of Misima and Porgera and the shorter lived Upper Ridges and Mt Victor mines.

The ten or so years between 1980 and 1991 saw a rapid expansion of the mining sector with new mines brought on stream, feasibility studies completed, extensive coverage of the country with grassroots exploration for gold, and Upper Ridges mine at Wau, 1987 identification of many prospects. The platform for continued growth and further exploration until 1993. Esso’s exploration efforts identified expansion was set, however the closure many new prospects but did not lead to of the Panguna mine due to civil unrest Newmont discovered Tolukuma during any developments and in 1996, Esso dulled this bright future. a helicopter-supported regional sold its exploration tenements to City reconnaissance geochemical survey in Resources which continued active 1991 to 2002 1985 and soon commenced drilling. exploration until 1990. This was the first new gold discovery in The stock market crash in November Papua since the discovery of Lakekamu One of the major 20th century gold 1987 dramatically reduced the in 1909. rushes occurred in 1988 with the availability of funds for exploration, discovery of rich alluvial gold at Mt however this took a number of years to Wafi was first located in 1979 but not flow through to the PNG exploration drilled until 1984. By 1986 the testing Kare. The area, located by CRA, quickly became a confusion of brown scene. By the early 1990s, grassroots indicated low grade, refractory gold and exploration was in decline and this was bodies in a sea of black mud with nearly this lack of success led CRA to joint to remain the case for the next 10 years. 5,000 local people extracting masses of venture the project to Elders Resources The focus of companies moved from alluvial gold. Over 250,000oz is in 1988. Elders commenced a major grassroots exploration to delineating estimated to have been won in the first drilling program and by late 1990 prospects which had been located in the year and about one million ounces by located the adjacent rich Golpu copper- 1970s and 1980s. gold porphyry system as well as 1991. Mt Kare displayed all the features significantly expanding the Wafi gold of a modern-day gold rush. Helicopters In 1992, BHP was still conducting resources. In 1991, a takeover of Elders ferried goods in and the miners and grassroots exploration programs and by Carter Holt Harvey saw CRA their gold out. Fortunes were made and identified and drill tested a new purchase Elder’s 45% stake and regain lost by the age-old gold field methods of porphyry copper-gold system at Mt 100% ownership. gambling, women and grog. Bini. This was a late discovery in the

8 history of porphyry systems in PNG and demonstrates that large systems remain to be discovered.

In early 1993, Newmont determined that Tolukuma did not fit its project target size and had access road difficulties and sold the property to Dome Resources. Dome Resources continued drilling and by late 1993 upgraded the measured resources to 440,000 tonnes at 17g/t Au and 46g/t Ag (250,000oz gold equivalent) and sought development approval. The approval process was difficult as Tolukuma was the first new medium scale, greenfields mine development since independence and some government departments had difficulties in adjusting to the differences between this project and Lihir mine process plant and opencut large scale developments. financial environment for exploration Highlands Gold was publicly listed and Construction began in May 1995 and is difficult. MIM exited PNG. Highlands Gold processing of ore commenced in intensified its exploration efforts and in December 1995. No road link was built Operations at the other producing 1997 announced a measured resource to service the operations and the mine is mines continued unabated although for Nena (at Frieda) and the totally helicopter supported. It some were impacted by external forces. commencement of a bankable feasibility commenced initially as an open pit At Misima, mining continued until study on the combined Nena and Ivaal operation and then moved to exhaustion of the open pit reserves in porphyry properties. In the same year, underground extraction of ore as strip 2002 when treatment of low grade Placer Dome made an unsolicited stockpiles commenced. The operation ratios increased. In mid 2000, Durban takeover of Highlands Gold to increase closed in May 2004 when all economic Roodepoort Deep Ltd acquired Dome its equity in the Porgera Mine Resources and commenced a re- ore was exhausted. At Ok Tedi, drought (Highlands Gold owned 30% of evaluation of the property and the caused by the El Nino event during Porgera). Placer Dome agreed to assign mining methods. A new underground 1997, resulted in temporary closure due the non-Porgera assets of Highlands mining method was introduced in 2002 to low river flows. Ok Tedi’s largest Gold to Highlands Pacific Ltd (HPL) and production is now being sustained shareholder, BHP Billiton, exited the which floated on the Australian Stock at 7000oz per month. project in 2002 over concerns of Exchange with the help of local environmental damage to the Fly River institutions. At Lihir, the completion of a positive system. Its 52% interest passed to the feasibility study in 1992 launched the PNG Sustainable Development In 1998, HPL reached agreement with project on the development track. Program Company which has a wide Cyprus Amax USA to re-evaluate the Special Mining Lease 6 was issued by mandate to promote the development Frieda porphyries, however in late 1999 the Government in March 1995 and in of PNG. Porgera was the first mine to Cyprus was taken over by Phelps Dodge September 1995 Lihir Gold Ltd was reach an annual production of one who elected not to explore in PNG and publicly floated to raise A$450 million million ounces which was achieved Frieda reverted to HPL. In 2002, for development capital. Construction from 1991-4. The open pit operations Noranda farmed into Frieda and commenced in 1996 and the first gold were continually expanded but the commenced drilling of the Trukai was poured in 1997. Annual underground operation was closed in prospect which encountered several drill production from the mine has averaged 1997. It was re-opened in 2001 to intercepts of 100m grading greater than about 600,000oz. exploit newly delineated reserves. The 1% copper. Porgera operations were also disrupted Tolukuma and Lihir were both by the El Nino drought of 1997 and HPL commenced detailed evaluation of discoveries of the 1980s gold boom and processing of ore was disrupted for a the Ramu nickel project which resulted were explored, developed and in period of about four weeks. in a positive feasibility study in 2000 for production within 10 years and 15 years the development of a strip mine and respectively. These achievements MIM reorganised its exploration and processing plant for the production of demonstrate that mines of different size mining holdings in 1989 and nickel metal and cobalt. The proposed and capital requirements can be brought established Highlands Gold Ltd as its development differs from previous on stream in PNG even when the PNG operating company. In 1992, projects as the beneficiated ore would be

9 transported by a long slurry pipeline from the inland mine site to a processing plant on the coast southeast of Madang. Financing the US$838 million development remains the main challenge for this project.

HPL also commenced evaluation of the Kainantu area in 1998 after resolution of access problems. Irumafimpa (now known as Kainantu gold project) emerged as a major target along strike of the old Kora mine, however due to HPL’s focus on the Ramu project little activity occurred until about 2000 when detailed evaluation and feasibility commenced. By 2002, a development proposal was with the Government and development financing was being arranged. The scene was being set for a new mine development.

After the withdrawal of CRA from Mt Kare, competition for the exploration Small scale hardrock mining at Mt Kare, 2002 licence over the area was intense and only resolved by a ballot which was won and acquired the properties in 2001 but operations, excluding Lihir, would close by Carpenters Pacific Resources. the shareholding in Aurora held by within ten years prompted the Ramsgate Resources, however, laid CRA and later the Guinness Peat Group Government to review the fiscal regime claim as a result of landowner dealings clouded Aurora’s future and that of the for mining in an attempt to attract a and the matter was finally resolved with PNG properties. This was to finally be share of the scarce international the formation of the Matu Mining joint resolved in 2003. exploration dollar. The outcome of venture (Carpenters 66.6% and these changes moved PNG from being Between 1996 and 2002, CRA Ramsgate 33.3%). In mid 1996, an unattractive fiscal location in which commenced the drill out of the Golpu Madison Enterprises entered into a joint to explore to being in the top quartile of high grade porphyry copper and venture with Matu to acquire 65% by fiscally attractive countries for mining. conducted limited drilling on Wafi the expenditure of US$8 million over These changes together with the high five years. Later, a restructure of the which identified further gold prospectivity of PNG initiated a turn equities in the property resulted in mineralisation at depth and expanded around in the exploration applications the gold potential of the property. In Madison holding a 90% interest and in 2003. An increase in metal prices in 2002, Aurora Gold agreed to acquire landowners a 10% interest. Madison late 2003 saw further increases in the property from CRA. continued exploration and outlined a exploration licence applications and significant resource. During 2002, the Government sold off increasing interest by international mining companies. The Government’s Exploration in the Wau district saw its holding in listed Orogen Minerals initiatives were having the desired effect. some of the most dramatic changes Ltd when Oil Search Ltd made a A new era of mining development was during this period. The adjoining takeover offer for the company and as a beginning to manifest itself. properties held by RGC and CRA, result Oil Search became a 20% shareholder in Porgera and Misima. which collectively contained over five By the end of 2003, all approvals for the million ounces in the Hidden Valley, The Busang gold exploration fraud in HPL Kainantu Gold were in place and Hamata and Kerimenge deposits, were Indonesia in 1997 brought exploration construction of the 100,000oz per year put on the market. These properties worldwide to an abrupt halt. Risk operation commenced. The 15 month were acquired by Australian Goldfields capital moved to the Dot-Com sector construction period should see and an intensive phase of exploration and by 2001-2002, PNG was production from Kainantu by mid 2005 and feasibility studies commenced. and this will be the first new mine Unfortunately, Australian Goldfields experiencing its lowest level of development in 10 years. speculated the in-ground reserves on the exploration applications since the late silver future market and went into 1970s. During 2003, the uncertainty of the receivership. Aurora Gold NL, together Aurora share registry was resolved when with Commonwealth Development 2003 Forward: The New Dawn Abelle Ltd, with the support of Corporation (CDC), formed Morobe The depressed state of exploration and Harmony Gold of South Africa, Consolidated Goldfields Ltd (MCG) realisation that most of the present acquired Aurora’s interest in MGC and

10 also that of CDC. During 2004 Roodepoort Deep (DRD) of South The timely changes to the fiscal regime Harmony acquired 100% ownership of Africa in late 2003 and DRD became a by the Government, the high Abelle. MCG completed the final major player with interests in two prospectivity of the country for world feasibility on the Hidden mines. class deposits, the increases in Valley/Hamata project in early 2004 commodity prices and the ability of the and lodged an application for a Mining The increase in metal prices also PNG system to facilitate mining Lease with the Government which is improved the development opportunity developments through community currently being reviewed. Construction for a number of smaller projects. Nord consultation have focused international is expected to commence first Resources announced plans to develop interest on PNG once again. The stock quarter 2005. its oxide gold reserves on Simberi and of prospects located during the major New Guinea Goldfields announced grassroots programs of the 1980s are Harmony also committed to a major plans to sequentially develop Sinivit, rapidly moving to development or are drill out and feasibility studies on the Imwauna and Weioko deposits by heap under construction. A new wave of Wafi and Golpu projects with the view leach process. grassroots exploration is beginning and to making development decisions new discoveries will be made. Technical Continued exploration at Porgera has during 2005. innovation and new geological models increased reserves and extended the and ideas will see the life of mines mine life by several years and geological The Ramu Project advanced toward extended. The significant contribution development with the signing of a and technical innovations at Lihir have made by mining to the economy of Heads of Agreement with China seen significant improvement in this PNG now seems certain to continue Metallurgical Construction Corporation challenging project. In April 2003, Lihir well into the future. (MCC). MCC will acquire an 85% commissioned a six megawatt (MW) interest by free carrying the PNG geothermal power station and soon after This new dawn should see a bright interests (Highlands 8.56%, MRDC approved the construction of a further future for the industry but we need to 3.94% and the Landowners 2.5%) to 30MW station which is due for be ever mindful of our history and commercial production. Development completion in early 2005. The vigilant as to the requirements of the agreements are yet to be finalised. combined 36MW will meet 60% of international market. For as sure as Lihir’s power needs from an there is a new dawn there will be a dusk Oil Search sold its 20% interest in environmentally sustainable energy and our challenge is to keep the sun Porgera by public tender to Durban source. shining as long as we can.

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