Nice outlook in the annual report. If all things go well we could have the out a press release "start of negotiations of the reopening of the Panguna mine" in June/July if the new president is elected. BOC seems to be very eager on this :-)
Nice opportunity in my opinion to pick up shares when share price level is "artificially" depressed by the ADR-depositary-banks selling their deposited shares for not tendered ADRs....
Although a formal review of the BCA has not started there is ongoing dialogue between the National Government and Bougainville Government about the future of the Panguna ore body and government responsibility for mining. There is increasing acknowledgement among stakeholders that Bougainvilles economic future needs mining if it is to be able to fund even basic services from its own resources. If the Panguna mine is to reopen the Bougainville Copper Agreement and related legislation need to be amended to accommodate changed circumstances and provide certainty for all concerned. There is also general agreement that negotiations are needed even if there is not yet agreement on the agenda and process. Landowners representation at any negotiations is critical but there is still work to be done on landowner reconciliation and the formation of a united landowner representative body. The process is underway to hold elections among landowners to form a new combined landowner group that will provide a united voice at the negotiating table. Those elections are due to take place in early 2010. Another important event in the lead up to formal negotiations is the election of a new President of Bougainville for a 5 year term. This will be a crucial election for the company because the next 5 years is the period in which the mine should be reopened to take advantage of the resurgence in mineral commodity prices and demand. The company will need the support of the new President and the cabinet as well as landowners. Funding and sovereign risk assurance for the project will require a united effort. There will need to be a fair and stable mining regime that gives investors the confidence needed to commit to a project that will cost in the order of US$3 billion.
Bougainville
The World Bank initiative aimed at helping Bougainville develop capacity to manage its mining sector continues and there is a good chance the transfer of mining powers to Bougainville will occur this year. That is an important step because as matters currently stand there is an expectation of transition but no certainty. Hopefully the new Bougainville mining regime will be largely consistent with the National model to assist with a smooth transition from old regime to the new. The BCA is National Government legislation and needs to be accommodated in any new mining regime for Bougainville. Although I believe it is important to take the time to get the new mining regime right it is also necessary for all parties to drive the process as hard as possible so the current promising signs for improved world economic growth are not missed. It is remarkable that the global outlook for mineral resources has rebound so quickly from the gloom I reported last year. What has happened illustrates just how susceptible the industry is to outside forces. Bougainville does not have the luxury of choosing economic cycles and needs to take the opportunities as they arise. The improved world economic demand for minerals has put the companys largest shareholder, Rio Tinto Limited, which is part of the Rio Tinto Group of Companies (Rio Tinto), into a new growth phase. A recent senior management change at Rio Tinto has resulted in Andrew Harding being appointed head of the global copper portfolio. Andrew knows PNG and in my talks with him he has recognised the opportunity at BCL and its vision to reopen the Panguna mine in a manner consistent with the Bougainville Peace Agreement. This endorsement is very welcome and is encouraging given managements enthusiasm to study a mine restart once the peace process has been resolved. Rio Tinto will be of great assistance to BCL in providing world class technical expertise and mine development experience.
Visit to Buka
An important step to a closer engagement between the Bougainville Government and BCL occurred last year when the President of Bougainville issued a formal invitation to the company to send a representative to Bougainville. The company accepted the invitation and the Company Secretary undertook a two-day courtesy visit during which he met the President, Ministers and senior administrators. The meetings were cordial and resulted in broad agreement on a range of subjects the Government and the company need to jointly explore. The company looks forward to further positive dialogue with the incoming President and Cabinet.
Year Ahead
I look forward to working with the incoming President and Cabinet of the Autonomous Bougainville Government. I hope the election process runs smoothly and allows everyone to go on with the important task of rebuilding Bougainville. By the time the President is elected the mine area landowners should have formed a new landowner association and elected their representatives. Once both these matters are finalised negotiations with the company over the future of the Panguna ore body can start formally. There has been no further technical work carried out since the order of magnitude study and the exploration study I detailed last year. The next step, a prefeasibility study on reopening the mine, is a very expensive exercise that wont be started until there is greater certainty that the Government and landowners support redevelopment. I hope that during the year certainty will come and the Board will approve the next phase of restart studies. The vision to return to active exploration and profitable mining remains but requires strong support from local stakeholders. The Board and management team are committed to the vision. BCL is continuing to support the work of the Bougainville Copper Foundation. This is an independent, not for profit, company that has been funded by BCL since its inception. This year, as in previous years, the Foundation has funded scholarships for more than 100 Bougainville students. It also undertakes special projects on a needs basis with the emphasis being on education, peace and good governance. The Foundation is proud of its achievements and those of its former scholars who are contributing to the development of Bougainville. It is pleasing that the global economic slowdown appears to be over and that the mineral sector is making a rapid and they strong recovery. This should be a year of great opportunity for BCL and Bougainville; the company is ready to move forward.
BOC Price at posting:
48.0¢ Sentiment: LT Buy Disclosure: Held
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