New Guinea gold mine prospects weighed down by varied risks

Ten years ago, gold mining icon Barrick decided to slim down its various global gold holdings to focus on larger core properties.

Among those properties was the small Kainatu Mine, in production for four years, located in the Papua, New value in the two underground portals, milling, mining facilities and a tailings site.

producing 25,000 ounces of gold last year. Plans are 50,000 ounces gold equivalent this year with 120,000 ounces in 2020.

A third stage of development is under way with a preliminary economic assessment next year and production possible in 2021. in the Papua highlands. The highlands account for four producing gold mines and two in development. Financing developments this summer saw $18 million raised from a new share issue and a $15 million loan from the company that buys all mineral concentrate from the mines.

Since the company bought the mine so cheaply and the ore has a relatively high gold grade — over one-third of an ounce per tonne – operating cost is low.

Total operating costs should run around $820US a tonne when global average is $1,200 U.S. an ounce

The silver and copper content help keep costs down. earnings, with earnings expected to more than double next year. That seems to shout a screaming bargain. Factors that have kept investor valuations down are numerous.

investors. Papua, New Guinea is an unknown and unfamiliar jurisdiction to investors, particularly those who shun politically and economically underdeveloped regions.

Historically, Papua was a British protectorate later under The country operates under a British legal and Parliamentary system. While a democratically elected Parliament governs, politicians have discovered courts can obstruct government plans.

Papua government paths are littered with lawsuits that have created uncertainty and instability as leaders were challenged in the courts. Another uncertainty comes from the population’s lack still living in the Stone Age have been discovered in the highland valleys. About two-thirds of the 8.2 million people are literate.

One island area, Bougainville, has become autonomous after separatist struggles.

The China factor creates concerns: China has invested -

city for its 20,000 Chinese residents in Papua.

Still, Papua is rated about the same as Alberta as a safe place to invest. Investors need to decide if the reward potential outweighs the risks.

CAUTION: Remember when investing, consult your adviser and do your homework before buying any security. Bizworld does not recommend investments.

Ron Walter can be reached at ronjoy@sasktel.net