Bougainville Copper keen to resume

Bougainville Copper keen to resume

by The Age

9th May 2007

Bougainville Copper Ltd (BCL) says it is steadily working towards resuming mineral exploration and mining on the Papua New Guinea island.

Chairman Peter Taylor said on Wednesday that directors believed the time was right to take advantage of opportunities that might arise on the special mining lease at Panguna and on seven adjacent exploration licence areas.

BCL was forced to abandon mining at Panguna in 1989 after Bougainville secessionist leader Francis Ona and his followers launched a bloody civil war sparked by landowner anger over mine benefits and environmental damage.

The conflict dragged on into the 1990s, claiming more than 10,000 lives.

The giant Panguna opencast pit remains within a no-go zone controlled by former followers of Ona, who died of illness in mid-2005.

Mr Taylor told shareholders at the company's annual general meeting in Port Moresby that a moratorium on mineral exploration in Bougainville was still in place.

But BCL was confident of a good outcome from negotiations with the PNG government and Bougainville stakeholders over a revised Bougainville Copper Agreement, he said.

Panguna landowners and the new Autonomous Bougainville Government have indicated their willingness to be involved in the process.

"I've said for many years now that before we go back into Bougainville we need the relevant landowners to be happy with us going on to their land," Mr Taylor said.

"This time around we would want to do it in cooperation with the landowners rather than as a stand-alone venture."

BCL and the PNG government had agreed to fund the review of the agreement and BCL had engaged technical staff from majority shareholder Rio Tinto to assess optimal mining strategies at Panguna using up-to-date mining software, Mr Taylor said.

But exploration would probably precede mining at Panguna.

"It's not a bad plan to have exploration come first because exploration is very low impact and it allows the landowners to familiarise themselves with a mining venture again," Mr Taylor said.

Panguna had an estimated mining life of 15 years but it would be expensive to get it up and running again, with estimates ranging upwards from $US1 billion.

But given boosted copper and gold prices, the economics were looking quite good, Mr Taylor said.

The company reported a modest after-tax profit of 3.7 million kina ($A1.575 million) with shareholder funds increasing to 378 million kina ($A161 million) in 2006.

Mr Taylor said half of those funds were readily convertible into cash, to provide BCL with the flexibility to commence feasibility studies and other work "aimed at achieving the company vision of returning to exploration and profitable mining in PNG".

BCL is owned 53.6 per cent by Rio Tinto Ltd, 19 per cent by the PNG government and 27.4 per cent by public shareholders.

At 1531 AEST, the company's shares were down 15 cents or 14.85 per cent to 86 cents.