Jan 30, 2010

EFIC awards contractor over K1.3b

MORE than US$500 million (K1.3 billion) in performance bond from Export Finance and Insurance Corporation (EFIC) has been made available to support an Australian engineering and construction firm to undergo contracts in the multi-billion kina ExxonMobil led PNG LNG project in the country.

The firm McConnell Dowell Corporation Limited (McConnell Dowell) specialized in engineering, construction, maintenance and building company working on infrastructure projects in mining, oil and gas, water, petrochemical and transport will be involved in two contracts in the country.

This includes the construction of the new Komo Airfield in the Southern Highlands province and roads and bridges required for construction, together with the installation of a fibre optic communications cable.
According EFIC, McConnell Dowell will undertake the contract work with international joint venture partners. The performance bonds, worth over $US20 million (K53 million), have been issued under an existing bonding line that EFIC provides to McConnell Dowell.

The EFIC is the financial arm of the Australian government's export credit agency that provides finance and insurance solutions to help Australian exporters overcome financial barriers when growing their business overseas. It also helps successful businesses to win, finance and protect export trade or overseas investments where the local bank is unable to provide all the support they need.

The Executive Director, Origination and Portfolio Management of EFIC, Peter Field said the credit agency will lend $US350 million (K927 million) as part of a syndicate providing finance to the project.

"We're delighted that McConnell Dowell has won these contracts, as the principal reason for EFIC's involvement in the financing is to encourage the use of Australian companies like McConnell Dowell in the project. We expect to see more contracts awarded to Australian companies in coming months, as the project gathers momentum."

McConnell Dowell's bonding line with EFIC was established in 2006 and has supported several major construction contracts in Asia undertaken by the company.

"The scope, complexity and location of our projects means bonds aren't always available in the commercial market. Our ability to utilise EFIC's bonding line has streamlined our process for securing international projects and freed up our finance and bonding facilities for local projects," said CEO of McConnell Dowell, David Robinson.

Telikom Launches new product

TELIKOM PNG on Friday launched its Fixed Xcess Wireless CDMA Service.

The third generation technology used involves refinement of simple value added features to the Xcess phone currently on the market.

It also features a dual handheld wireless Xcess Mobile phone with a 3 toea per minute SMS service. The handheld wireless version can receive and send emails.

Telikom CEO, Peter Loko said solar power options are being looked into as the biggest challenge to the wireless system is charging of the phones in rural areas.

He added that other simple features such as FM Radio receivers for the convenience of rural users will be incorporated into future Xcess phone designs.

Another added feature would be access to information posted by subscribers.
Mr. Loko said the wireless internet and phone service, currently accessible in major centres like Port Moresby, Lae, Mt. Hagen, Madang, Buka, Kimbe and Alotau will be extended in the next three weeks to cover Manus, Kerema, Kavieng and Arawa.

He said the equipment for the additional sites is ready and there will in total be sixteen operational sites throughout the country by the end of March or early April.

Briggs: Harmony drill outcomes thrilling


HARMONY GOLD says its current drill results at Wafi-Golpu project in Bulolo, Morobe province proves there are more gold and copper resources than the main Golpu area.
According to miningweekly.com the company reported that recent drilling conducted at the Golpu West prospect had indicated that intercepts at that deposit were significantly higher.

Golpu West is located off the western margin of the Golpu orebody and entirely outside of the existing resource limits. Drilling to date has defined approximately 160 metres of strike and the high-grade mineralisation remains open in all directions.

Harmony which is the world's fifth largest gold producer stated in a company announcement the drilling has recently uncovered over 100 million tons of combined gold and copper resources at 0.6 g/t gold and 1,1 percent copper for 2.93-million ounces of gold and 1.76-million tons of copper.

As part of its exploration program in the country the company confirmed that Golpu West drill results outline potential for a step-change impact on the minable resource base. This would provide a key driver to fundamentally alter the economics of the project.

"We are thrilled with the outcome of the drilling results at Golpu West. The results are very encouraging and highlight the fact that the Golpu system is poorly constrained at depth. Excellent potential exists for additional mineralised intrusions and/or structural repetitions around the margins," said Harmony CEO Graham Briggs.

Drilling to scope out the geometry and full extent of the new mineralised zone is continuing, with three exploration drill rigs. Two additional deep capacity rigs will arrive in mid-February to accelerate the work programme.

The South African based mining giant (Harmony) which has 50/50 Joint Venture with Australia's Newcrest Mining Limited expects that this drilling would significantly expand the current Golpu resource.

It said in a statement the 2007 Golpu prefeasibility study contemplated a block cave operation that would mine 100-million tons of ore and produce 1,7-million ounces gold and one-million tons of copper, over a ten-year life-of-mine.

Harmony noted that it was considered that a resource upgrade or significant change in upfront capital would be the most likely means to increasing the margin and lowering the risk profile for a favourable development decision.

The current schedule for the completion of the new resource model and progressing of the concept study is June.

Meanwhile, Trading Markets.com reports Harmony has been restructuring its operations to focus on lower-cost production, closing mature shafts at mines in South Africa.

It said it expects commercial levels of production at the Hidden Valley open-pit gold and silver mine in Papua New Guinea, being developed jointly with Australia's Newcrest Mining Ltd. (NCM.AU), during the March quarter of 2010.

Harmony's second-quarter results are scheduled to be released Feb. 8.

Polye backs Kramer-Ausenco merger


THE recent merger between PNG's Kramer Group and Australia's Ausenco has gain support of the country's minister for works, transport and Civil Aviation, Don Polye.

In the merger Ausenco Limited (ASX: AAX) ("Ausenco") has acquired a 50 percent equity interest in Kramer Group ("Kramer"), a leading PNG-based engineering company, providing a strategic local presence and access to the region's growing energy and resources market.

Mr Polye in a brief media release said the Kramer-Ausenco merger which occurred in early August 2009 is good for the country.

"It is pleasing to learn of the merger... I support this initiative as it will benefit the country in the long run in terms of lifting the profile of the country in the area of engineering.

"Both companies must be commended for taking a bold step forward in their respective endeavours to enhance their business operations within the region and at the global level."

Minister Polye encouraged other local companies to follow this as an example to support the government in its effort to boost the capacity of nationally owned companies to take on larger, more capital intensive projects within and outside of the country.

"Whilst similar mergers between foreign and PNG owned companies are encouraged it is important to emphasize the need to ensure that in all such arrangements equal or majority ownership must always  be maintained locally so that a controlling authority is retained."

Ausenco Chief Executive Officer Zimi Meka said "the acquisition solidifies Ausenco's presence in an area of strategic importance to the oil and gas and resources sectors and enhances the solutions that Ausenco and Kramer offers to key clients in the region".

Through the acquisition, Kramer Group will be renamed KramerAusenco and will be managed by the existing Kramer Group team.

"KramerAusenco will provide a strong local presence and extensive infrastructure expertise in the South Pacific region, where investment in natural gas, gold and base metals is expected to grow significantly in the near future," Mr Meka said.

"Kramer's local experience, combined with our global expertise and strong balance sheet support, positions us well to deliver the significant projects planned for this region.

"Kramer Group already has a familiarisation with some of these projects, having provided early works services to support the multi-billion dollar PNG LNG project.

Kramer Group founder and Chief Executive Frank Kramer said he was very pleased to partner with Ausenco for what he saw as the next exciting phase of Kramer's growth.

"Together with Ausenco we are now able to offer an expanded range of services to our clients and we look forward to growing the business in PNG and the Southern Pacific Islands," he said.

Ausenco recently completed a well supported capital raising to, among other things, enable strategic acquisitions that assist in solidifying the diversified delivery of services in growth market sectors.

Mr Meka said he believed there were signs of improvement in the current market, but Ausenco's activities and financial results last year had been affected by delays in the timing of projects commencing.

"We've tendered for significant amounts of work with positive signs in recent months of improvements in most client sectors reinforced by the announcement of some recent project wins. The level of enquiries in all business lines has increased and we are looking positively to 2010. However, we have been faced with delays of several months beyond normal tendering processes before clients have made decisions about projects," he said.

"Solidifying our presence in key growth markets and sectors, like PNG infrastructure, oil and gas and resources, through equity interests in KramerAusenco will position us strongly for growth."

With annual 2008 revenues of $7 million (K22 million), Kramer Group has been operating for over 30 years and is the largest engineering and project management company in the South Pacific region. Kramer has approximately 100 employees based in Papua New Guinea, Australia, Solomon Islands, Vanuatu, Fiji, Samoa and Tonga.

Ausenco will have representation on the KramerAusenco Board, while KramerAusenco will have access to the full suite of Ausenco services and capital management.  KramerAusenco's results will form part of Ausenco's process infrastructure business line.

Resource boost at Fried project


MINING group Xstrata and major developer of the Frieda River copper and gold project in Sandaun province could see an estimated increase of 26 percent in resource tonnage.

The Brisbane based company revealed this in a recent announcement to the Australian Securities Exchange (ASX) and the Port Moresby Stock Exchange (PoMSox) through Highlands Pacific – partner in the Frieda River project.

Xstrata as a major global diversified mining group is also listed on the London and Swiss stock exchanges
The company official Peter Forrestal said the latest results confirmed Frieda River as potentially a very significant copper-gold producer in the Asia-Pacific region.

"The resource estimate includes significantly increased inventory and improved confidence levels, including a 26 percent increase in resource tonnage," said Forrestal, executive general manager for project evaluation at Xstrata's copper unit.

The new estimate released recently shows over 1 billion tonnes at 0.53 percent copper and 0.29 grammes per tonne of gold.

Xstrata, the world's fourth biggest copper producer, said a pre-feasibility study for the deposit is due to be completed in the third quarter of this year.

“Our current focus is to conduct various technical studies to support a pre-feasibility study which is scheduled for completion in the third quarter of 2010. Stakeholder engagement and environmental studies are also under way.

“We are committed to moving forward with the Frieda River project in genuine partnership with our joint venture partners Highlands Pacific Limited and OMRD, the project’s host communities and district, provincial and national governments,” said Mr Forrestal.

Anglo-Swiss Xstrata owns 76.3 percent of the Frieda River project, with stakes of 16.95 percent held by Highlands Frieda Ltd and 6.75 percent by OMRD Frieda Co Ltd.