FIRST clear signs that the abandoned Panguna copper-gold mine on Bougainville Island may reopen and that exploration of the island's highly prospective terrain could resume have emerged, sending shares in the Rio Tinto-controlled Bougainville Copper sharply higher.
Shares in BOC, the owner of Panguna and its operator until attacks by secessionist rebels in 1989 forced its closure, surged 16c or 26 per cent to 77c in response to reports in Papua New Guinea that the mining minister, Sam Akoitai, had arrived in London for talks with Rio Tinto, the 53.58 per cent controlling shareholder.
Although investor hopes that Panguna might reopen soared, the focus of Mr Akoitai's meeting with Rio's executives is said to be on lifting the exploration moratorium on the troubled island. He is expected to return to Port Moresby on Sunday when a press conference on the issue is planned.
The exploration moratorium was imposed at the height of the Bougainville crisis. BOC holds seven exploration licences on the island but Mr Akoitai was quoted as saying he was interested in discussing the potential for other mining groups to take up exploration rights. Once described as the "jewel in Rio's crown", Panguna, in an undamaged state, would be hugely profitable at current copper and gold prices.
But since being abandoned by BOC the open-cut has deteriorated and the mine equipment destroyed. Estimates by brokers of the cost of re-opening the mine come in at more than $US1.5 billion.
In February BOC told the Australian Stock Exchange that there was still "considerable uncertainty surrounding the future of the Panguna mine".
Peter Taylor, BOC's chairman and a staff member at the mine from 1985 to 1987, has said repeatedly that the company was keen to talk to the autonomous and national governments and local landowners, to "discuss what they want for the future".
Hopes for a return to Bougainville also picked up in July last year on the death from malaria of Bougainville secessionist rebel leader Francis Ona.
Bloody attacks on Panguna by Mr Ona's Bougainville Revolutionary Army led to its abandonment. Mr Ona, a former surveyor at the mine, proclaimed himself "King of the Island" in the secessionist conflict that raged in the 1990s.
Mr Ona's death followed the election of an autonomous government for the island, a process he rejected because, in his eyes, "Mekamui", as he called the island, had already won its independence from the mainland of PNG.
Before its closure Panguna's annual production was about 180,000 tonnes of copper concentrate and more than 400,000 ounces of gold.
The mine also boasted reserves of 710 million tonnes, averaging 0.4 per cent copper.
BOC Price at posting:
0.0¢ Sentiment: ST Buy Disclosure: Held
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