By NOBERT KOKE
THE Marape Pangu led government on Friday signed a historic deal with Barrick Niugini Limited to recommence the Porgera Gold Mine that has been closed for over 12 months since April last year.
The framework agreement that was signed between the Mining Minister Johnson Tuke and Barrick Gold President and CEO Mark Bristow paves way for the reopening of the mine later this year.
Prime Minister James Marape after the signing ceremony said the new deal is better for all concerned.
He said in the old structure, State parties, only had 5% through Mineral Resources Enga (2.5% Enga Provincial Government and 2.5% SML landowners), while 95% was held between Barrick Niugini Limited (47.5% Barrick and 47.5% Zijin).
“Under the new deal, the equity split is 51% and 49% in favour of PNG stakeholders, and the opportunity for landowners to increase their equity beyond with the additional 10% free equity paid for by Barrick.
“The royalty paid was 2% to the SML landowners and the EPG but the new deal secured an additional 1 % to 3%. Up to 2019, the economic split stood at around 25% for the PNG Stakeholders with equity and taxes, where as the new deal will see that move to around 53% in favour of the PNG stakeholders over the full life of the mine,” Marape said.
Mr Marape said the new agreement does not give away any tax concessions, which means the State is able to collect its taxes upfront.
“There is an applicable 30% Corporate Income Tax to the project. An additional 2% is paid for fiscal stability which had previously been conceded by the State will now apply,” he said.
Mr Marape said interms of community obligations; Barrick will pay US$3 million (K10.6 million) annually for 10 years to Porgera Sustainable Development Fund, and a further US$15 million (K53.3 million) upfront to appropriate categories of Landowners.
“The biggest possibility in the agreement is that the State retains the right to acquire the full 49% of the shares in 10 years’ time at fair value and that Barrick will finance the required start-up of the mine.
“Other key benefits that are captured in the agreement includes the immediate employment of citizens and significant personal income taxes inflows following the reopening of the mine and the development of key leadership and technical capabilities for Kumul Mineral Holdings Limited in view of their future involvement in mining projects in the country,” the Prime Minister said.
Marape said the announcement is a significant milestone in the government’s effort to build strong frameworks within the resource sector which will benchmark future considerations for similar projects around the country.
He said Enga Provincial Government, the landowners and the State through Kumul Mineral Holdings Limited is set to benefit greatly in this outcome.
He thanked Barrick Niugini Limited for exercising utmost understanding through their willingness to work with his government to reach the finality.
Marape said the signing now paves the way for the negotiations and finalising of other agreements including the shareholders agreements, the mining development agreements and other important arrangements involving landowners.
Barrick CEO Mark Bristow said Barrick on behalf of BNL’s joint venture partners Barrick and Zijin Mining was delivering on its promise of reaching a fair agreement on the future of Porgera for the benefit of all its Stakeholders notably the local community, Enga province and the PNG government.
“We intend to partner with all key stakeholders to make Porgera a world-class long-life gold mine,” he said.
Meanwhile, the country’s largest superannuation fund, Nasfund has commended the government and welcomed the signing of the ‘new Porgera’ agreement to reopen the Porgera Gold Mine in Enga province.
In acknowledging this development, Nasfund CEO Ian Tarutia, says the decision by the government to work together with former Porgera developer Barrick Niugini Limited is one that bodes well for the future of the mine, and its employees.
“Following the closure of Porgera in April 2020, many direct employees and contractors have been hard hit, with the fund playing our part in providing relief through unemployment benefit payments for eligible members.
“We look forward to welcoming back our contributing members when Porgera restarts operations,” Mr Tarutia said.
