CASM – Ulaanbaatar, Mongolia - 2007 Development Synergies between Large Scale and Small Scale Mining in Papua New Guinea CASM – Ulaanbaatar, Mongolia - 2007

Papua New Guinea

Mining Projects

Large Scale Mining 3 Large scale Mines + 2 under construction and two in feasibility, 1 recently completed closure 3 Medium Scale Mines + 1 under construction Mining single largest export earner Only minerals mined are Copper & Gold/Silver

Small Scale Mining ASM = Small Scale Mining Estimated 50,000 miners countrywide 4.5 tonnes (145,000 oz) gold produced each year Kina 180 million (US$ 60 million) Average income per miner is K3600 (US$1080) PNG average income is K994 (US$300) Mining improves income - reduces poverty Approx. 400,000 benefit (PNG multiplier=8)

Indigenous land rights recognized in 1884. Minerals owned by State Today 97% of land is still owned by indigenous people. 3% by Government. PNG unique. Small scale mining is well regulated as a consequence of the country’s mining history, development of its mining law and very strong customary ownership rights to land.

Mining Act has grown from a framework to regulate small scale mining to accommodate large scale mining. Mining Act currently under review. Small scale miners seek more regulation

MINING TENEMENTS Exploration licences Alluvial Mining Leases Mining Leases (Tribute Agreements) Other support leases - Lease for Mining Purposes - Mining Easements

EXPLORATION LICENCE Any size up to 2,500km2 Holder has first right to apply for mining tenement Landowners consulted prior to grant Technical and financial conditions Granted for 2 years 5 years Maximum term 15 years

INDIGENIOUS RIGHTS Right to mine on own land if non- mechanized Alluvial Gold only mineral mined ALLUVIAL MINING LEASE Alluvial Mining Lease required if mechanized AML – 5 ha. Amalgamation of up to 5AML’s Other landowners consulted prior to grant Granted for 5 years Limited conditions attached to AML

MINING LEASE Hardrock Mining only up to 60km2 Covers any size : Small-Medium-Large scale Granted for life of mine Extensive consultation process prior to grant All stakeholders involved State (National, Provincial, Local) Company, Landowners, and impacted communities

Community Benefit Package – MOA Mostly from Govt Community Benefit Package – MOA Mostly from Govt. Royalty of 2% Infrastructure, Health, Education and Future Generations Trust Company – spin-off businesses, employment preferences, community projects Projects selected by communities Compensation Agreement with ML landowners

TRIBUTE AGREEMENTS Lease holder reaches agreement with a miner or contractor to mine on the lease for a percentage of the gold (normally 15%) Registered under Mining Act Benefits both Leaseholder and contract miner

Community Reporting Obligations Mine Closure Planning Conceptual at start of mining Reviewed regularly Implemented 5 years prior to closure Aimed at Community Security post mine Projects implemented during mining must be sustainable after closure. Community Reporting Obligations

MISIMA MINE

Relationships between Tenements Prior existing AML’s or ML’s excluded from Exploration Licences (EL) Compensation payable to prior Leaseholders but not to post EL leases AML’s can be granted within EL with permission of EL Holder AML transparent for Hardrock exploration 30 day period between new EL applications to allow lease applications.

PNG process is open and transparent Prior informed consent for all tenements Landowners are great supporters of mining resource developments Benefits which flow to Communities is public Use of resource revenues by Government less transparent Process tested and modified over 30 years since Independence and it works.

Faces of PNG