lovely locals

Not to be a one side argument here is some information on the Lovely locals

BARRICK Gold is facing an estimated cost of $US10 per ounce of gold produced across its entire worldwide operations solely due to problems facing its Porgera mine in Papua New Guinea.

Porgera mine, image courtesy of Barrick Gold.

The ExxonMobil-operated Hides gas to electricity plant has long provided power to Porgera but the plant’s power lines to the mine were recently sabotaged by villagers in the Harida jungle.

While the action may be directed more against Exxon – following the devastating landslide that claimed dozens of lives near construction sites of the PNG LNG project in the Southern Highlands – the Porgera mine in Enga Province is feeling the strain.

During a conference call, Barrick chief executive officer Aaron Regent conceded the Porgera mine had been impacted.

“But the situation is, I say, in hand, with respect to law enforcement agencies and so we are optimistic that it won’t be an ongoing issue but we have experienced some difficulties to the start of the year,” he said.

Separately the mine faces another serious issue in regards to power supply.

Regent said the long-term and “very favourable” power supply agreement with Exxon expired last year and negotiations with Exxon for a new contract were still underway.

Barrick executives are clearly anticipating a hefty increase.

Company chief financial officer Jamie Sokalsky said natural gas prices in PNG were in the neighbourhood of being five times higher than those which might be experienced in North America.

He said about $10 an ounce of Barrick’s total costs this year were a result of “higher power costs we are experiencing at Porgera”.

Consequently, Sokalsky said it was a significant impact, not just on Porgera but on Barrick’s overall cash costs.

He said it was looking at a worst-case scenario along with other alternatives as it was “actively negotiating”.

Earlier this week, The National newspaper reported it could be two weeks before power was fully restored to Porgera.

A source recently told PNGIndustryNews.net the mine shut down open cut operations as its fuel reserves fell below 40%.

Porgera, which also has an underground mining operation, is using big diesel-fired gensets for its electricity needs and fuel consumption is up to 220,000 litres per day, according to the source.

Since the weekend, there was limited traffic in and out of the mine as there was also a felled power pole across the road at Laigam.

Barrick owns 95% of Porgera while state-owned Minerals Resources Development Company has the remaining 5%.

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