Other Developments I would now like to comment on our Strategy, and Developments in 2009 and up to the present. Throughout 2009 the company has maintained its strategic plan which has as its main objective a return to profitable mining on Bougainville, for the benefit of all stakeholders. Although it has not yet been possible for company representatives to spend time on Bougainville to assess the state of the companys assets, and to conduct audits relating to safety and the environment, there have been several significant developments. An important step to a closer engagement between the Bougainville Government and BCL occurred last year when the President James Tanis 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. It is recognised on all sides that peace and good order are prerequisites to any return of company representatives or contractors to conduct safety and environment audits and rehabilitation. These programs would in themselves provide early economic and social benefits to landowners and the wider population. These are key issues for the company which will assist where appropriate. The company looks forward to further positive dialogue with the incoming President and Cabinet. Understandably, the election process is pre-occupying most Bougainvilleans at this time, but under the President, most of 2009 was marked by an acceleration of the reconciliation and weapons disposal processes. Progress was also made in the drawdown of powers to Bougainville under the Constitution. As an interested party, your company continues to be in dialogue with the Government of Papua New Guinea at a high level, and has made clear to both the National Government and the Autonomous Bougainville Government its willingness to conduct remedial work on Bougainville in regard to safety and the environment as soon as it is appropriate to do so. Issues that are of importance between the two Governments include the drawdown of mining powers to Bougainville, the renegotiation of the Bougainville Copper Agreement and the World Bank capacity building program. The company suggests that all of these issues should be given impetus, to provide Bougainville with the opportunity to benefit from a resumption of activity leading to full scale mining, and particularly in the light of the present upturn in the global mining and metals cycle. Although a formal review of the Bougainville Copper Agreement has not started, there is ongoing dialogue between the National Government and the 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 let alone create the infrastructure needed for broader based economic development. 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. The company will need the support of the landowners as well as the incoming president and cabinet. 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. 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 Bougainville Copper Agreement is National Government legislation and needs to be accommodated in any new mining regime for Bougainville. So these things are all related. 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 rebounded so quickly from the gloom I reported last year. What has happened illustrates just how susceptible the industry is to outside forces. Bougainville, and indeed this company, do not have the luxury of choosing economic cycles and need to take opportunities as they arise. So although there are issues critical to your companys way forward which depend upon outcomes beyond our control, the outlook for 2010 remains positive. The improved world economic demand for minerals has put the companys largest shareholder, Rio Tinto Limited, 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. There has been no further technical work carried out since the order of magnitude exercise and the exploration study I detailed last year. However I remind you that our studies indicate that there is in fact more gold, silver and copper in the ground at Panguna than has previously been extracted. Further BCL tenements adjacent to the Panguna mining lease are maintained in good order, and await exploration. In the five years or so that it will take to undertake feasibility studies, permitting, capital raising and equipment procurement necessary for a restart of mining, global metal prices might stay at levels close to those prevailing today. If mining powers can be drawn down by Bougainville without undue delay, BCL believes that the Bougainville Copper Agreement, while its terms are being re-negotiated, can facilitate a return to mining at Panguna and the early generation of benefits to all stakeholders. BCL stands ready to play its role in this approach. The Way Forward The next step, a pre-feasibility 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 strong recovery. Broad support for the return of your company to Bougainville is being sought, and I believe, gradually being achieved. I look forward to working with the incoming President and Cabinet of the autonomous Bougainville Government. I hope the election process continues to run 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. This should be a year of great opportunity for BCL and Bougainville. Thank you again for your attendance and your attention. Further details are available in the Annual Report and on our website. I now welcome your questions on any matters raised. . Peter Taylor Chairman Attachments/ slide presentation
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