oh boy, page-11

Sorry, to be so long in replying, Amber.....but life sometimes intervenes  and besides that, on top of all this current wretched state of affairs at MMC, I really had the stuffing knocked out of me, with Mahogany's sad post.  I believe the shock of it, led me to really lose it, and  to write my absurdly long previous post.  Afterwards, I came to the conclusion, that I think he's gone for good, and with that I've lost my team captain, and consistent buoy for all these years in my holding Marengo, and truly will miss his good cheer!   I feel sincerely bereft. It's like there's been a death in the HC/MMC family! (And, to all my tough mates down under.... Oh! hush, up!...a diva is allowed to feel and express her feelings!)

So, pressing on...

Amber,  I actually did think it was you that posted the possible need to drill to keep the tenement  going, but as I wasn't sure, I didn't name you, as it wasn't  germane to my point. I understand you were making a different point, but mine was: Was the deep  background reason for additional drilling done out of necessity to keep the lease going? Or did he not heed the old adage,"When you're in a hole, STOP digging"? Dunno!  There's several reasons I could conjecture, some good, some bad, why the drilling went on,  burning up cash, when funds were so low, but that was my over all point.... I'm exhausted with all our guessing on all Les' many decisions, instead of his sharing his reasoning!  He chose to keep us in the dark for so long,  and now with sp at rock bottom, we have precious little information to judge him on, other than sp, so many of his mistaken deadlines, and a busted budget,  and it's quite understandable that many of us have lost confidence in him.

You listed several possible ways for refinancing.  Sorry to say, things of that nature are beyond my ken, but in bodysurfing your novel ideas, my felt sense was.... Boy! I wish you were inside management rather than outside!

While neither an engineer or expert, I am fairly informed on  DSTD.  Rest assured, DSTD is way, way, cheaper than land based tailings solutions. It's approx. 100 times capital costs for land rather than sea. Around $8 million for DSTD versus $600 million for a land dam, plus continuing maintenance. It's not surprising, that now MMC is out of funds, my old bête noire is back on the table, after MMC saying it wasn't going to employ DSTD over a year and half ago. Given the price differential, MMC must have had pretty darn good reasons, back then, for abandoning DSTD.

DSTD, is a very high risk proposition, IMO. There are good reasons most developed countries have effectively banned it's use, and most tellingly, BHP, of OK Tedi fame, has a stated policy that it will not use DSTD in any country anywhere. Many marine scientists are against it, and attack as fatally flawed the methodology of the one report that so minimizes the risks, that is so often waved around by companies seeking to use DSTD in PNG.  People oft bring up the dangers of land based dams given the heavy rainfalls and earthquakes in PNG, but expert engineers contend there are specific dams, albeit costly, that can be built that can greatly alleviate that risk.  Hidden Valley's land based dam in PNG, seems to be an exemplary one.
While, no doubt, no method is totally foolproof, the overwhelming preponderance of evidence from the scientific community is that land based damns are the only way to go in regards to PNG's Astrolabe Bay.   There are some of them that straightforwardly say, use of DSTD in Astrolabe Bay is a ticking time bomb.   Plus, the people of PNG are extremely adamant that they DON'T want the risk of DSTD, should that matter to anyone.  It does to me, and I would feel as they do, if I was in their situation.

Should Marengo choose DSTD, and be allowed to do so, here are 2 possible scenarios that I greatly fear:
#1. As the Chinese mining company Ramu, has forcefully gotten it's way, and has been using DSTD for a short while, although banned for use in China, it's already showing what potential problems could lie ahead. The landowners are highly agitated and alarmed,  that already the Ramu River's waters are a rusty red, due to Ramu practices.  Several months ago, I saw photos of Ramu's land slurry pipeline that leads to the sea, that showed several places where the pipeline was about to rupture, when it wasn't even used at full capacity yet. One can only imagine, what that might portend for the pipeline in the sea. This is beyond what marine scientists fear about the actual use of DSTD. Stunningly, the Somare government created an amendment for Ramu, where the PNG landowners won't be allowed to sue for environmental damage, so how judiciously will they endeavor to protect the environment and consequently the livelihood of 30,000 PNG people that used those waters for their living, is anyone's guess. My deep concern is that the marine scientists concerns will be realized along with Ramu pipeline accidents, and the bay will be an environmental mess,  by the time we would be ready to use DSTD.  I certainly believe, if that becomes the case, then there will be civil unrest. There is heated civil unrest going on right now at the Porgera mine with several already killed. It will be heated, as they know Marengo, is about to dump millions of tons more into the same area. What the extent of the civil arrest might be, who knows, but it isn't totally out of the question, that there could be guerilla war attacks on Marengo itself. And make no mistake, should my worst fears come to pass, I'll be on the side of the PNG people.  Should this happen to transpire, my concern will be not whether the government  won't  allow Marengo to use DSTD, my concern is that the government needing mining funds will!  I didn't invest in Marengo years back, to possibly have blood on my hands, and to be party to all this!

#2.  Scenario.   Based on the above hypothesis, suppose the government does indeed call a permanent halt to DSTD, should there be civil unrest about the environmental damage created by Ramu, or even simply because that in a few years, Ramu's use of DSTD has proven not to be a viable solution because of indicated environmental damages.      Here's Marengo with it's shiny new DSTD system ready to go, and Bingo! it will be back to the drawing board to start planning and building a land based dam.  Just imagine how long that will take, that is if they even have, at that point, the funds to do it.

Very possibly, you may think my concerns about DSTD are overwrought, and you could be right, but they are not farfetched, and I am not alone in my thinking about DSTD. Even if the chances of my worst fears are very small, I still find the risk much too high, especially given all the other future problems that we might encounter till we get to production.  I do like to sleep at night!  I held my breath during the Ramu court cases, hoping the courts would take DSTD off the table for MMC. When they didn't, I was crushed! When over a  year and a half ago, Marengo said it wasn't going to use DSTD I was beyond elated, and bought a lot more shares!   Now that DSTD has raised it's ugly head again at MMC, I've been encouraged by the relatively new O'Neil administration, where many officials seem to be diligently working to change mining laws, that have been so unfair to the PNG people, and so detrimental to their health and livelihoods by careless, always money saving motivated, environmental destruction. In Sept. I posted here,  O'Neil's statement that, "no new mining venture will be approved unless stringent environmental conditions are met."  I put hope in that statement, that he won't approve further use of DSDT.

Each time DSTD is used, it's a site specific experiment, frequently taking years to evaluate the consequences.  At the very least, surely the prudent move on the government's part should be, now that Ramu is using DSTD, that was approved under another administration, against the strong protest of the PNG people,  is to give the process several years, in order to monitor and evaluate the unknown consequences, before giving permission for another mining company to plan on dumping millions of more tons of tailings at the same site. Obviously, I would also  think it would be very wise on Marengo's part, not to make the monumental decision to use DSTD, when we'll be trailing by several years in Ramu's wake, and unsure of what the circumstances may be when we get ready to employ it.  Very possibly all will be fine when we get there, but I myself do not like the risk, regardless of how small, of having this being a possible catastrophic decision. At least, if Marengo had gone first using DSTD, LT investors like myself could jump ship soon after production began, without hopefully taking a major loss or actually garner a profit on sp at that point, and leave it to other investors to carry my concerns about DSTD going forward.    Going second, ties our destiny to what happens with Ramu and it's practices,  and the possibility we may not be able to go into production with DSTD, if chosen and allowed, when we get there in several years. Then what? I would like to get out of this MMC position sometime in my lifetime, without a staggering loss and hopefully with a nice profit.

So, while I have hope that the given recent statements from several people in the government and O'Neil himself, that they won't permit MMC the DSTD option, I've also been reading articles in the last few weeks, describing how PNG's coffers are way down,  due to the downturn in the mining industry. So, perhaps, money, once again, will scuttle wise decisions, and be another triumph for hope over experience!  So I wait with intrepidation, of what the DFS will reveal on the tailings matter.

Sovereign risk and the use of DSTD has always been my primary concern with holding Marengo, but I do apologize for being so long winded, with another preposterously long post, in stating my concerns and fears. No one, more than myself, wishes that my concerns are ungrounded and wrong. I also hope, that I will never ever have to post on DSTD again!

With that, I think we all have heard quite enough from me lately, and I plan to take a break from posting for awhile! I am also in need of of getting out my DVDs and doing a month's long marathon of watching nothing but happy ending "chick flicks", where there's nary a word about tailings, power supplies, DFS etc.

Ciao!
Diva