Papua New Guinea muscles in on Harmony’s JV


Papua New Guinea muscles in on Harmony’s JV

Published Date: 2019-09-16 | Source: Stephen Gunnion | Author: Stephen Gunnion

Papua New Guinea muscles in on Harmony’s JV

Reports say the new government in Papua New Guinea wants to retain two-fifths of the gold from Wafi-Golpu.

Harmony Gold Mining led a decline in gold miners on Friday following reports that the Papua New Guinea (PNG) government wants to retain 40% of gold produced from its Wafi-Golpu joint venture with Australia's Newcrest Mining. Harmony's shares shed as much as 10% but other gold producers also fell sharply. The JSE's Gold Mining Index declined 8.8%, paring gains for the year to about 50%, as the gold price dropped back below $1,500 an ounce.

Wafi-Golpu is a quality copper-gold ore body and tier one asset, owned jointly by Harmony and Newcrest. The PNG state, which is trying to increase the benefits flowing from resource projects back to communities, has the right to buy an equity interest in the project.

PNG Minister for Commerce and Industry Wera Mori told Reuters that the government would negotiate with Newcrest but if the partners didn't like it, the state itself would mine Wafi-Golpu as it owned the resources. Mori said the government would offer concessions on duties and tax as part of the negotiations and was confident a deal would be struck.

Releasing interim results last month, Harmony said permitting of the project had been delayed as a new government came into office, compelling it to defer and revise the planned work program it had planned to commence this calendar year. However, it said PNG continued to signal its support for the project. It also operates the Hidden Valley mine in PNG, which reached commercial levels of production in June last year.

Reuters cited a spokesman for Newcrest as saying that Mori's opinions didn't reflect the view of the PNG cabinet and that mining didn't fall under his jurisdiction.

Harmoy's shares closed 9.2% down at R44.19 on Friday, reducing this year's gains to 75%. Newcrest declined 2.8% to $33.51 on the Australian Securities Exchange.

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