Ministry of Mining - Ministerial update on the mining sector (c. Feb-Mar 2024)

1972. The extractive industry has always 2020 by the Department of Mineral Policy and The advancing of the Frieda River project accounted for more than 80% of the total export Geohazards Management (DMPGM) makes it license application through to project revenue of PNG. It plays a significant role in mandatory for all operating mines to submit negotiations with the State. supporting skills development, wage income live extraction and export data in real-time to a tax, employment opportunities, and community central hub at the Mineral Resources Authority In addition to these flagship endeavors, the project developments. (MRA). MRA has since operationalized this hub following are the priorities for this year going and for the first time in the history of PNG, the forward: The Marape-Rossi government’s impetus for State now has 24/7 visibility on the extraction of greater benefit is clearly demonstrated in the our mineral resources from our land. LEGISLATIVE AND POLICY 2019 PNG Extractive Industry Transparency PRIORITIES Initiative (EITI) Report. The PNG EITI reported I wish to commend the mining industry for your a total of PGK 32 billion in contributions from the collaboration in making this become a reality. The priorities under the Department of Mineral extractive industries in 2019. Only 18.5% (PGK You can be assured that the State respects your Policy and Geohazards Management- 6.14 billion kina) of that sum was received by PNG rights to confidentiality and disclosure of this entities. Out of which, only 3.7% (PGK 1.2 billion vital information. 4. Mining Act 1992 Review kina) went to the National Government.

2. Alluvial Mining Policy Ensuring the final stakeholder consultations and In that year, mining alone contributed about 44% the passing of the Mining Bill 2024 before the (PGK15 billion) of the total export revenues and The second is a policy change that introduced end of 2024. the extractive industries collectively contributed the Alluvial Mining Policy. This policy of 2021 that 86% of the export volume out of the country. restricts and reserves alluvial mining activities 5. Review of the Mining (Safety) Act 1977 However, only 7% of that went to government for Papua New Guineans only. revenue. The passing of the Mine & Works (Safety & A majority of our people are active participants Health) Bill 2024 to improve, update and adopt This is a significant concern in line with the theme in the alluvial mining sector. Therefore, this internationally acceptable safety practices and “TAKE BACK PNG”. Are we being responsible to Government has reserved all alluvial mining standards, inclusive of workers’ and workplace the people of Papua New Guinea in comparison to activities for Papua New Guinean artisanal and environment safety. other jurisdictions throughout the world? Why is small-scale miners only. This also extends to the buying and export of alluvial gold from PNG with 6. Production Sharing Regime: there a huge disproportionate return for the State against a huge volume of our resources being the exception of existing foreign operators who Investigating the implementation of a production- exported out of the country? are exempted by the State. sharing regime in PNG. <!-- page break -->

7. Gold Bullion Bank: To ensure mining is conducted in a manner that ensures rehabilitation (7) Development of the Geohazards Assessing the feasibility of establishing a gold and closure obligations are carried out Management Policy. bullion bank to address foreign exchange responsibly in an environmentally friendly challenges. manner throughout the full scope of the Provides policy guidance on disaster mining project cycle. monitoring and management in-order to protect lives and assets and to ensure

8. Support for the Alluvial Mining Sector: (4) Development of a Sustainable Mining infrastructure development in PNG is Development Policy. compliant with the PNG Earthquake Load To implement the policy requirements of the Shedding component of the Building Alluvial Mining Policy endorsed by Cabinet in To ensure every aspect of the mining Code. 2021 particularly to reserve all alluvial mining cycle from exploration to closure is activities only for PNG citizens. conducted in a sustainable manner that 9. Geohazards Management improves the quality of life for the affected

9. New Policy Initiatives communities. Priority will be given to this area which performs a very vital function under the Ministry that To introduce the following policy initiatives undertakes 24/7 monitoring and assessment to developed by DMPGM- (5) Development of the Mining Involuntary safeguard and protect the lives of our people in Resettlement Policy. areas prone to volcanic eruptions, earthquakes , (1) Development of the Mining Policy tsunamis, and landslides. Major priorities will be To ensure adequate compensation the relocation of the Rabaul Volcano Observatory, A review of the current Mineral Policy to for mine-impacted communities and the replacement of obsolete monitoring adopt best practice principles and realign resettlement in a fair and humanely equipment, and the conclusion of the Geohazards with the ongoing changes made to the acceptable manner that is sustainable Management Policy. mining regulatory framework. and provides for the future well-being of the affected community beyond mine The Mining sector contributes significantly to (2) Development of the Offshore Mining closure. the nation through the generation of foreign Policy. exchange, dividends, income tax and other (6) Development of the Downstream Mineral financial streams creating employment To provide for the exploration and Processing Policy. opportunities for citizens, and delivering benefits extraction of the deep-sea mineral to project landowners and so on. The importance potential both in PNG and on the The new policy provides for downstream of collaboration among all stakeholders within international waters on the high seas. processing of the country’s mineral the mining sector is vital in this industry. As resources, exemplified by the recent the Minister responsible, I stand committed (3) Development of the Mining Project agreement between Kumul Mineral to supporting policy initiatives that benefit the Rehabilitation and Closure Policy. Holdings Limited (KMHL) and Ramu interests of all parties involved. Nickel Mine. THE MINING INDUSTRY Background: Mining Industry in PNG Exploration and Mining has been the largest and market size and quadrupled metal price forecasts for Nickel and Cobalt complex industry in the country since time immemorial. the next decade. The extractive industry, (metals, oil and gas) has always accounted for more than 80°/o of the total Furthermore, metal prices are forecasted to double and Nickel and cobalt production outputs may double export revenue of PNG. triple over the next decades, for copper, gold, nickel and or triple up to 90,000 and 9,000 tons per annum, cobalt, which will remain the principal metal commodity respectively if Ramu MCC’s proposal to double its The operating mines exports from PNG . production output, and the Mambare (Oro Nickel) is brought into production. Currently, PNG hosts 4 world-class large mines, 3 Copper production Outlook medium-scale and 3 small-scale mines; and several Potential Closure of Major Mines alluvial gold fields across the country. 1 PNG expects strong total annual copper production, which may average between 500,000 tons to a -Depletion of Mineral Resources The large-scale mines are: - maximum of 700,000 tons per annum , for a period of • Lihir and Porgera produces gold silver dori bars; more than 30 years, after Wafi-Golpu and Frieda River At the same time, it is worthy to note that the potential • Ok Tedi,produces copper gold concentrates; and projects are commissioned as operating mines. end of mine life for existing majo r mines in PNG, for • Ramu produces nickel cobalt hydr oxideproduct. gold mines by 2053 and copper mines by 2065. Refer These mega projects will take 5 to 7 years for to Figure 2. The medium scale mines are: Simberi, Hidden Valley construction and hopefully by, 2030 these projects may and Kainantu generally produces gold-silver. become operating mines. Mineral Exploration Porgera has been shut down since April 2020 and was Indeed, PNG will become a significant copper producer Exploration depends entirely on private sector officially declared open on 22nd December 2023. for critical minerals in the globe, possibly for over a investments in mineral prospectin g and exploration. period of three decades. Exploration expenditures declined after 2015 and Mineral Production continued after the onset of the COVID-19 in 2019. Gold Production As of October 2023, the total exploration tenements Over the last five years, the average Aannual metal on the MRA register stands at 153 current and active production has been: - Gold production from PNG has dropped from over 2 exploration licenses. Exploration expenditure continues million ounces gold to about 1. 3 million ounces gold to dwindle to K 108 million in 2023 from >K640 million Gold 2.4 million ounces; per annum since closure of the Porgera mine . in 2015.Refer to Figure 3 Copper 84,500 tons concentrate; Nickel 33,500 tons; New geoscientific data is required to entice Cobalt 3,000 tons; and 1 The Marape-Rosso government, is keen and committed to exploration in PNG. Chromite 123,000 tons concentrate progressing Wafi to signing a Development Agreement by first quarter of 2024.The Wafi-Golpu is a world-class copper- gold deposit will become the first underground block cave mine, when and expects to produce 1.2 million ounces of gold MRA’s Strategies in Response to Export Revenue equivalent, or XXXX ounce of gold and XXXX tons of copper. Address the Depleting Reserves and Wafi-Golpu & Frieda River Projects are large scale copper gold deposits which may be permitted for development by 01/2024 Decline in Exploration Activities These mineral products have earned an average of and 04/2024, respectively. Considering the potential closure of all the major mines PGKIJ billion over the last five (5) years and peaked at by mid-2060, and the declining exploration activities K15.7 billion to-date in 2020. These export revenues over the last five years, two major intervention programs account for about 45°/o of PNG’s total export revenue. PNGs total gold annual production may average around 2.5 mi11ion ounces with the re-opening of Porgera were initiated by the government: - Refer to Figure 1. mine and Stage 4 expansion of K92 mine, by the year 2026. a) Investment in new Exploration Data as infills; and The largest gold producer is Lihir mine which may close b) Research for new mineral deposits innew frontiers; Mining Production Outlook and about mid 2050’s. However, K92, Wafi-Golpu and Frieda PNG will benefit immensely from increased metal River may substitute any declining production. <!-- page break --> Investment in research for new mineral • There are two remaining tasks that are still ongoing; commissioning. deposits in new frontiers the Community Development Agreement (CDA) (formerly Memorandum of Agreement) is at the advanced stages, and Compensation Agreements Update on Frieda River Permitting The Mineral Resources Authority had commenced between Landholders and New Porgera Limited are identification of gaps in the National Geoscientific ongoing. • The permitting of the US$ 6 billion Frieda River copper- Datasets. gold project will receive full attention in Q3/2024. A. Community Development Agreement (CDA) The MRA is in the process of designing and implementing (formerly Memorandum of Agreement) • We anticipate permitting of Frieda River project by a National Work Program to cover gaps and specific quarter three (3) of 2026. areas of National Interests as set out in the MRA 2022 • Over 200 Position Papers for the CDA were collected in Wabag, Alotau and Port Moresby for various -2027 MRA CORPORATE PLAN. Stakeholders since August 2023. Mine Extension, Expansion and Work had already commenced for: - Rehabilitation Projects a) Developing Work Plans and costings to cover • The State Team comprising relevant State Departments nationwide geophysical and geochemical surveys and Agencies, reviewed the Position Papers and K92 Mine Expansion Program and mapping: Refer to Figure 4 entered the various benefit streams into a matrix, and b) Testing deep-seated ore bodies, in particular, also segregated parties into those recognized by laws The K92 mine is an expanding mineral producing conceptual porphyry Cu-Au targets at Dawadawa; for certain benefits and those not entitled. asset and may qualify for Special Mining Lease. c) Strategic Minerals to meet global demands required for transition energy; and • The State also recognized LLG’s and Provinces a) Stage 2A Expansion final commissioning completed d) Major government intervention programs for Alluvial affected by riverine discoloration and solids pollutions in May 2023 has increase throughput by 25 percent; Gold Mining Sector in PNG through supporting the contributed by the erodible waste rock dumps at the development and growth of mechanized alluvial mine. b) Stage 3 Expansion currently underway is expected gold mining. to achieve Tier 1production of 290,000 ounces gold In order to compensate those affected commun1t1es, equivalent per annum by early 2025; and the State Team has recommended additional benefits 2024 WORK PROGRAM FOR THE by way of Community Projects, to be benefitted under c) Stage 4 Expansion intends to achieve 470,000 MINERAL RESOURCES AUTHORITY the Tax Credit Scheme or Infrastructure Development ounces gold equivalent production per annum by Grants. Thus, the State Team will be writing to affected mid-2026, which will match the output from Porgera The Mineral Resources Authority as the Regulator governments to submit their project proposals for mine. and Promoter of Mineral Resources within the inclusion as Associate Agreement to the CDA. jurisdiction of the Independent State of Papua New Urgent amendments to the Mining Act are required to Guinea will undertake two main functions:- • Preliminary Consultations with Affected Local Level accommodate conversi on of a Mining Lease t o Speci Government (LLG) and Provincial Government (PG) and al Mining Lease, and vice versa without adversely (1) Permitting Of Mining & Exploration Projects and landholders of Special Mining Lease (SML) and Lease affecting the mining operations. Similarly, variati ons to Administer Compliances; and for Mining Purposes (LMP) have been completed on an exi sti ng mi ni ng tenement boundary are required. 23 that hosts Gas to Electricity (GTE) and riverine (2) Promote Sustainability of Mining solids pollution and discoloration will commence next week. Tofu Minerals and Abandoned Tolukuma Mine The three major projects of National Importance that • Home-grown company , Lole Mining was the acquired are undergoing permitting are:- • Final Community Development Negotiations will the Tolukuma assets under liquidations as successful

1. New Porgera Gold Silver Mine; commence in 3rd week of March 2024 and is bidder for K23 million .

2. Wafi-Golpu Copper Gold Project; expected to take a week-long before formalization.

3. Frieda River Project; and • Tolu Minerals had successfully listed on the Australian

4. Expansion of K92 mine Securities Exchange (ASX) and commenced trading B. Compensation Agreement on 10 November 2023. Mining Projects of National The Compensation Agreement is: an important a) Raised AU$11.3 million secured in a private Significance requirement of the Mining Act, under which there will be no entry for mining and exploration (S155) or any financing and b) AU$17.3 million secured in the IPO. These mega projects represent >K45 billion worth of breach of the agreement may constitute grounds for the new capital investments on new mining projects; and cancellation of the tenement (S.159 ©). The principles • Preparation for the construction of mine access about KS billion investments on sustaining CAPEX on of compensation are clearly stipulated under the Mining road and rehabilitation of the old mine facilities has existing mines. Act (s.154). commenced. The New Porgera Limited N partners were already • Tolu Minerals has also pledged very strong Two prominent projects worth over a total of US$1 3 permitted to remain and operate under the court- commitment to airborne geophysical survey program billion of potential new capital investments are: - ordered Care & Maintenance in order to make safe and drilling program over their exploration and mining a) US$ 5.38 billion Wafi-Golpu copper-gold project and maintain integrity of the mine. The Consent tenements , commencing in May 2024. comprising US$2.5 billion sustaining capital Compensation Agreement was anticipated to obtain expenditure; and permission from landholders to fulfil Section 155 of the Mining Act, which was successfully completed . Under Grant of Ok Tedi Mine Extension application b) US$ 6 billion Frieda River copper-gold projects CCA, NPL is required to enter into new compensation Agreement under one year. • Extension Application for Ok Tedi Mine’s Special Mining Lease (SML) 1has been GRANTED on the 4m Update on New Porgera Mine of December 2023 by the Head of State for another Negotiations for the Compensation Agreements have commenced, in January 2024 and is progressing 20 years, commencing Year 2022. • Special Mining Lease (SML) 13 and the 15 ancillary tenements for Porgera mine were GRANTED by the well. Negotiations will ultimately extend to power State on 13th October 2023, for a 20-year term. pylon landholders along the Mining Easement and Potential Expansion of Ramu Nickel-Cobalt Mine affected riverine communities down to Zone 3. During • The Consent Compensation Agreements required this process, the landholders have the opportunity to • Ramu nickel cobalt mine is contemplating an to re-open the mine have been formally concluded negotiate improved rates. The Chief Warden from MRA expansion program at the cost of about U$Sl .5 billion. between the Landholders and New Porgera Limited . and his team has been assisting the company and If the proposal is implemented, the mine will double landholders throughout the process. its annual metal production output. The Consent Compensation Agreement for New Porgera was further strengthen by the amendment to the Mining • Roll-out of Community Development programs Potential Extension of Hidden Valley Act on 30th November 2023, (the Mining (New Porgera) including resettlement and relocation will follow. (Amendment) Act 2023. • Hidden Valley mine is contemplating extension of Dealing with stakeholders is increasing comp lex and mine life subject to completion of a feasibility studies. • On 23 December 2023, all necessary Permitting requires delicate balancing. The State Team and MRA has the background knowledge and experience to deal required for the re-opening of the mine were with various stakeholders. Reviews of Memorandum of concluded and the mine was officially declared open. Agreements or Community • After much rehabilitation work due to vandalism and Update on Wafi-Golpu Permitting Development test start-up, the mine officially poured its first sets of gold dori bars, last Friday, 23rd February 2024. • The processing of permitting the development of the The MRA has already scheduled reviews for the following US$ 5.4 billion Wafi-Golpu copper-gold project is at Mining Projects for 2024 The maiden event was witnessed lby the Prime Minister advanced stages. 1. Ramu Nickel Mine -Challenges with Ombudsman Hon. James Marape, Governor Grand Chief Sir Peter directive not to conduct elections for the Krumbukari Ipatas, Member Lagaip Hon Aimos Joseph Akem, • Negotiations of Mining Development Contract. (MDC) Landowners remain a challenge. Team has Mining Minister Hon. Muguwa Dilu and Managing between the State and Project Proponents are in the scheduled elections and rolled of rMoA in Q2/2024. Director for Kumul Minerals Holdings Mr. Sarimu Kanu final stages and expects conclusion by QZ/2024. and Managing Director Mineral Resources Authority Mr. 2. Hidden Valley Mine - Preparatory Work for the Jerry Garry. • MRA anticipates GRANTING of Special Mining Lease Election of a new Chairman in progress. Thereafter, (SML) by Q2/2024. the CDA negotiations will commence. New Porgera Limited is expected to achieve name plate capacity production of >500,000 ounces per annum or • Preparations for the Community Development 3. Simberi mine - Preparatory work for the meeting 41,000 ounces per month by July 2024. Agreement. (CDA) had commenced . Minister declared under way and negotiations dates to be finalised in development forum opened and position papers have Q2/2024. Remaining Tasks: been received in 2023. Community Development Agreement (CDA) (formerly 4. Lihir mine - Preparatory work for the meeting Memorandum of Agreement) and Compensation • Negotiations for CDA will commence when MDC is under way and negotiations dates to be finalised in Agreements concluded and signed. Q2/2024. • Construction period may take 5 years before <!-- page break -->

5. K92 Mine - RMoA cleared and in frnal stages of Support for Alluvial gold Mining Sector The government has declared caveat for the new Mining approval for signing. Communication Land Titles Bill to be introduced after the 50th Independence commission to be fully constituted in Ql/ 2024 and At present some 200,000 artisanal miners deploy very Anniversary. resumption of landowner identification anticipated simple panning and sluicing methods, which produces for Q2/2024. about 5,000 kilograms gold or 120,000 ounces per However, there are immediate needs for minor annum, which generated up to K640 million per year. amendments to cover gaps in the in the current laws, Ongoing Development of Live Mineral Refer to Figure 5. correct deficiencies and to enhance attractiveness for exploration: Data Central Repository Hub at the The alluvial gold mining sector in PNG has the potential Mining Haus to develop into one of the most successful Small- 1. Allow Woman folks to work underground; Medium Scale Enterprise ventures given widespread 2. Tendering of Mineral Assets or Competitive Pursuant to Section SA of the Mining (Amendment) Act presence of alluvial gold. Bidding; 2020 (the Act), the State through Mineral Resources 3. Downstream processing. Authority had commenced the establishment and The MRA through its small-scale Mining Training College 4. Conversion of mining tenement; maintenance of a repository hub at the Mining Haus in Wau is planning to upgrade its outreach program by 5. Variation of mining tenement boundary; for live mineral production live data for every operating rolling out Pilot Program for mechanised alluvial gold 6. Community development and benefit sharing; mine in Papua New Guinea. mining. 7. Relocation and resettlement; and

8. Mine closure. Ok Tedi, Lihir and Simberi mines have been connected to Several concepts and costings are being developed and the hub. Ramu, K92 and Hidden Valley are at advanced we anticipate rolling out the program in Q3/Q4 2024. stages. Communications are being established with New Porgera mine and engineers will tap into Porgera Support for Minor Amendments to the HON. MUGUWA DILU, MP mine by end of Ql/2024. All new mines will also be monitored by the Central hub for metal production in Mining and Mining (Safety) Acts Minister for Mining real-time for reconciliation purposes. APPENDIX - LIST OF FIGURES <!-- page break -->