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Bougainville Copper


nekro
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BCL is listed

-on the ASX (BOC)

-on the NSE (BOCOY.PK (ADR) BOCOF.PK (Shares)

-in Germany (867948 ADR) (852652 Shares)

 

In a Pressrelese the Panguna Landowners stated: We want BCL back.

The new elected President James Tanis want to reopen the Panguna Copper Mine

 

 

2 In deept reports from Swen Lorenz : http://www.undervaluedshares.com/ (scroll down)

 

Company website: http://www.bougainvillecopper.com.pg/

 

Press Relases : http://www.stocknessmonster.com/news-history?S=BOC&E=ASX

 

European shareholdes of Bougainville Copper (ESBC) http://www.bougainville-copper.eu/index.html

 

Friends of Bougainville http://www.friendsofbougainville.com/

 

NEW DAWN ON BOUGAINVILLE http://www.bougainville.typepad.com/

 

PNG Newspapers

 

http://www.thenational.com.pg/

 

http://www.postcourier.com.pg/

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Panguna Landowners Proposal

 

PROPOSED ACTION PLAN

 

National Government Gives:

 

1. National Govt’s 76.4 million shares will be given in a trust for Bougainvilleans.

Trust to be supervised by UN, World Bank or some such eminent body.

2. The tax from mining will be shared equally between ABG and the National Govt

until such time as the autonomy referendum takes place in 2015. First three years

after signing of New BCA tax free.

ABG Gives and Forgives:

1. Peace, good law and order and favorable investment climate and tax regime that

includes exemption from dividend withholding tax and interest withholding tax

2. All Guns to be surrendered: Bougainville to be a Gun Free Zone. Combatants to

be paid two rates: one rate for each home made gun surrendered already (the

records of this exist already) another rate for automatic guns. Negotiations with

Me’ekamui; removal of road blocks.

3. Opening of Arawa port and Aropa airport

Landowners Give and Forgive:

1. Support for New BCA unanimously endorsed in a Mining forum meeting

2. Unrestricted and free access to BCL without any fear

New BCA signed

Jointly signed [ABG, National Govt, Landowners and BCL] New Bougainville Copper

Agreement [bCA] that includes lifting of moratorium on leases and permission to mine

New BCA to be signed as a Supplemental Agreement appended with the Old BCA

 

BCL Gives after signing of the New BCA:

 

1. K11 million plus interest to landowners at signing of New BCA

2. Agreement to give royalty of 3.5% of sales to landowners; cash flow to

commence when ore ready for milling is processed

3. Debt raising by RIO against future copper and gold production

4. Training facilities for Bougainville youth, support for Radio Bougainville

 

SUMMARY OF SALIENT POINTS FOR SUPPLEMENTAL BCA AGREEMENT

 

Gold USD 942.60 per troy ounce, Copper USD 1.58 per pound; K1=USD 0.3785

K1=AUD 0.5667 AUD1= 0.66 USD. Interest rate 7.5%

Three streams of ongoing sustainable cash flow from BCL and their proposed

beneficiaries:

1. Taxes: Approx K 458 million per annum split 50:50 between ABG and National

Govt about K 229 million per annum to each

 

2. Dividends on 76.4 Million shares: Beneficiaries to be split 50:50 between 50% for

all adult Bougainvilleans, and the remaining 50% for Landowners. Quarterly

dividend payments to them to be managed jointly by the National Govt and ABG.

The ownership of shares to be held in trust by the ABG and BCL. The dividend

stream is K 133 million per annum.

3. Royalties: 3.5% of revenue attributable to mining area to be mapped and paid out

to individual title holders on a monthly basis. Annual royalties of K100 million

per annum; this is about K 19,937 per annum per adult landowner or K 1,661 per

adult landowner per month. No dividend withholding tax will be applicable on

dividends paid on BCL shares.

Non Recurring one-off payment: At the time of signing of the New BCA BCL will pay

Landowners payable to them since 1990 of K1.4 million per annum plus interest plus

expenses incurred.

THE OPPORTUNITY PRESENTED BY BCL AS A GOING CONCERN

I. Root Cause of the Problem

The root cause of the problem was the unfair distribution of income amongst the three

main interest groups viz Landowners, North Solomon Provincial Government and the

National Government. During its 17 years of life from 1972 to 1989, 58.4% of benefits

received from the mine went to the National Government, and only 4.8% to the

Provincial Government with merely 0.2% going to Landowners. The remaining 36.6%

went to Non Government shareholders for their risk capital, technology and management;

that was quite fair.

II. 1987 Production and Prices

In 1987 when there was no Additional Profits Tax, when average copper price was US

81 cents per pound and gold price was USD 446.7 per troy ounce, the Earnings per

share were 24.83 USc (Earnings of USD 99.55 Million). Total concentrate produced was

585,500 Tons grading 30.4% Copper, and 25.1 grams per ton of gold. This corresponds

to 177,992 Tons of copper or 392 Million pounds worth USD 318 Million at US 81 c per

pound plus 585,500 x 25.8/31.1 = 485,720 troy ounces worth USD 217 Million. Total

sales of USD535 million per annum and net profit of about USD100 million per annum.

III. Valuation of Shares, Taxation & Royalty as a going concern

If we assume the same level of production as in 1987 and the current price of copper at

USD 1.58 per pound and gold at USD 942.60 per troy ounce the extra sales will be

392 Million pounds x [1.58 -0.81] = USD 302 Million

485,720 x [942.60 – 446.7] = USD 241 Million

Incremental Sales = USD 302 + 241 = USD 543Million

Total Sales per annum = 535 + 543= USD 1078 Million

Royalty

It is proposed to pay a royalty of 3.5% of sales to landowners

This will be USD 37.73 Million or K 99.7 Million per annum

 

If we assume there are 5000 adult descendents of the original 510 titleholders, this

corresponds to K 19,937 per annum or K 1,661 gross per adult landowner per month.

Royalties must be 3.5% Special Mining Lease Title landowners only; no sharing with

ABG who are separately getting generous revenue from taxation (not available to

Landowners). These shall be split 70% to individual title holders and 30% to a Future

Generation Fund or Non Renewable Resources Fund. Should this split occur monthly

payment to individual landowners will be 0.7 x 1,661 = K 1,163 net per month.

Income Tax

Income Tax in 1987 = USD 55.7 Million

Interest Cost in Year 1 = USD 113 Million 7.5% interest rate on US$1.5 Billion

Incremental Tax = 0.3 x [543 – 113- 38 ] = USD 118 Million

Tax per annum = 55.7 + 118 = USD 173 Million = K 458 Million

Earnings per share

Incremental Profit After Tax = 0.7 x [543-113-38] = USD 274.4 Million

Total Profit After Tax = 100 +274.4 = USD 374.4 Million

Incremental Eps = USD 0.68

Total Earnings per share = USD0.93 per share

Dividends per share

The loan of US$1.5 Billion will be fully repaid in 7 years. Let us assume a dividend

payout ratio of 70%.

Dividends per share in first 6 years while loan is being repaid = USD 0.651 or $A 0.99 or

K 1.74

Dividends on 76.43 Million shares = K 133 Million per annum

Valuation of shares Copper prices have increased from 81 US cents a pound in 1988 to

about US 1.58 cents a pound and if the mine were running at the pre-89 capacity,

earnings per share would be about 3.7 times the then eps of 25 US cents a share. In the

late eighties the shares hit a high of $A7.20; on a similar valuation basis the shares could

hit a high of $7.20 times 9.6 or $A 26.78 .

On a more conservative P/E multiple of 12, the shares should be valued at USD 11.16 or

AUD 16.90 provided no new shares are issued. This corresponds to K 29.84 per share

The 76.43 Million shares would be valued at K 2,280 Million. Hard facts requiring

negotiation and distribution predominantly for Bougainvilleans:

Shares with an intrinsic value K2.3 billion plus Annual Income available to

Bougainvilleans/PNG of K 458+133+100= 691 Million per annum or about K 2.7 million

per working day comprising:

- Annual Tax of some K 458 Million; shared equally between ABG and PNG Govt

- Annual Dividends worth K 133 Million to Bougainvilleans

- Annual Royalty to landowners worth K 100 Million

If we assume there are 70,000 adult Bougainvilleans and the dividends are distributed

equally amongst them, each adult Bougainvillean will receive about K 1,428 per year

 

Kina Values 1988 figures are actual, NEW BCA 2008

If taxes are shared 50:50 between National Govt and ABG/Bougainvilleans

And if dividends from shares are paid equally among all distributed in the ratio of 1/2:1/2

for Bougainvilleans: Landowners

The mine life based on proven reserves is 14 years. But if the moratorium on exploration

is lifted, the mine life will extend to about 30 years. Also, that will provide greater

benefits of royalty to the new landowners in whose leases those areas exist.

There is a big quantum leap in benefits for Bougainville:

· New BCA provides ABG/Bougainville income from dividends and taxation of

about K229 Million p. a., from 2012; this is a whopping increase from merely

K5.5 Million received per annum in the pre 1988 era.

· New BCA provides for Landowners to receive about K 100 million per annum

from Royalty and half of K 133 Million per annum from dividends or total of K

166.5 Million from about 2011 compared with about K0.2 Million p.a. in the pre

1988 era

· New BCA provides equity ownership by Bougainvilleans and Landowners each

of some K1.15 Billion worth of shares in BCL compared with zero shares earlier.

It is obvious that this will be the biggest step forward for Bougainville in their history and

all Bougainvilleans need to be united in the pursuit of this goal. The Supplemental

Bougainville Copper Agreement (2008) needs to be agreed by the initiators viz

Landowners together with the ABG, the National Govt and BCL. This bottom up

approach will help in fast tracking development which will deliver K5 million per day of

benefits from the mine.

IV. Stock of Ore & Waste Removed

If we add the 18-year data of the two rows from the Table in the last two pages of the

Annual Report we find that:

- Ore and Waste Removed in the 18 years was 1248 M Tons

- Ore Milled was 675 M Tons

- On average the company mined about 69.3 Million tons per year [or 1248/18] and

milled about 37.5 Million tons per year [or 675/18]. The difference between these two

figures is 573 M Tons. The company has not stated what percent of the mined ore was

waste. But it is believed the ore stockpile is enough for 2 to 3 years of milling. So the

mining equipment can come after 2 years of start-up. The mining equipment costs more.

It is also believed a phased expansion is possible. This means maybe a few hundred

million dollars of investment at start will be enough; later a billion dollar worth of

investment would be required. That will be easier to raise once a profitable operation has

commenced at Panguna. That is a big plus for speedy cash flows: tax revenue for ABG,

royalties and dividends for landowners and Bougainvilleans.

V Mine life

Panguna has a mine life left of more than twenty years based on known proven reserves,

on top of the 17 years in the period 1972-89. If the moratorium on exploration is lifted

 

over the 7 other leases held by BCL there is a high probability that another Panguna sized

deposit will be found with a further mine life of 37 years. That is twenty years proven

reserves plus 37 years likely reserves.

VI. Why should Bougainvilleans sell the copper and gold for developing their

economy and human resources?

In the book “Stocks for the Long-Term” Jeremy Siegel has compared the relative

performance of US stocks vs gold, inflation and bank deposits. The Wharton research he

headed revealed that a dollar invested 200 years ago was worth $7.2 million if invested in

U.S. stocks, about $11,500 if invested in bank deposits but merely $13 if invested in gold.

Given that copper price has risen only six fold in the last 100 years it is best that

Bougainvilleans sell this and use the proceeds for development of their most precious

resources viz their human resources; also tourism, cocoa and fisheries. Sell mining

resources to build human resources over the three next generations. America sold their

copper and gold in the nineteenth century so they could invest the profits from

underground deposits to what was above ground including its people.

VII. Assumptions

1) Current price of copper at USD 1.58 per pound and gold at USD 942.60 per troy

ounce.

2) A capital investment of USD 1,500 Million which will be made wholly via nonrecourse

loans or non-voting preference shares by BCL at an interest rate of 7.5%

per annum, with loan repayment in about 7 years of USD 273 Million per annum.

In Year 1 the interest cost would be USD150 Million. The loan of USD 1500

Million would be fully repaid in seven years from profits.

3) No new ordinary voting shares will be issued by BCL. (This will help in

maximizing the value of shares as well as Dividends received by the National

Government, ABG and Landowners).

4) To allow for carried forward tax losses to be used fully and to encourage BCL to

speedily invest a larger amount of capital (which will help Landowners to earn

more royalty and the ABG/National Government to earn more from dividends and

taxes) offer BCL a tax free status for first two years of full production viz 2010

2011. There shall be no dividend withholding tax.

5) A tax rate of 30% will apply from 2012. (It will take BCL at least 2 years to get

into production so this tax concession will be available for only 3 years during

which time they would anyway utilize their carried forward tax losses). This tax

will be split equally and paid directly by BCL to the ABG and the National

Government

6) Current exchange rate of K1 equals US 37.85 c and Aus 56.67 cents.

7) Landowners will get royalty at 3.5% of sales per annum. This is higher than the

rate of 2% provided in the Mining Act. As a quid pro quo there shall be no

dividend withholding tax paid on shares of Bougainville Copper, which will

also be beneficial to landowners as shareholders of BOC. The dividend

withholding tax rate is currently 10%

8) No credits are assumed for Molybdenu

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Panguna landowners want to talk with BCLhttp://www.thenational.com.pg/033009/nation40.php

 

PANGUNA landowners want to talk with Bougainville Copper Limited (BCL), developers of the now-defunct Bougainville copper mine, face to face.

This was the message they gave to the chairman of the Parliamentary Committee on Ombudsman Commission and Member for Esa’ala, Moses Maladina, last Thursday.

In a meeting with Mr Maladina at the Panguna district office, interim chairman of the Panguna Landowners Association Michael Pariu called for a quick forum with BCL to air their grievances that have been outstanding for so long.

Landowners wanted to meet BCL as they were willing to discuss their differences and allow BCL to resume operations.

The Panguna landowners used Mr Maladina’s visit to air their grievances on a number of issues that had remained outstanding over the last 20 years

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  • 3 months later...

Panguna reconciliation unites old enemies

 

This reconciliation will pave the way to the reopening of the panguna mine

 

http://bougainville.typepad.com/newdawn/20...ld-enemies.html

 

Panguna reconciliation unites old enemies

By Aloysius Laukai

 

 

 

 

The people of Panguna today attended a traditional clenching ceremony in preparation for tomorrow’s reconciliation ceremony.

 

The traditional ritual was to remove blood stains from former fighters in the Bougainville crisis that killed about 20,000 people and left another 40,000 people homeless.

 

The Panguna event was the first of three reconciliation ceremonies scheduled for the area around the former minesite.

 

The reconciliation was between uncles of the late chief and Panguna landowner killed at the start of the Bougainville conflict.

 

Those who were clenched included fighters in the conflict, Mekamui soldiers, Bougainville revolutionary fighters and those who fought alongside the PNG Defence force, the resistance fighters.

 

After the ceremony, ABG President, James Tanis said the ritual had united the youths of Panguna and there should be no more factions in the area.

 

 

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  • 2 weeks later...

Panguna Mine supposed to Re-open soon!

 

read the Post-Courier (PNG) 30.10.2009:

 

Panguna to benefit ABG and national Govt

 

THE once lucrative Panguna copper and gold mine will become another major contributor to the economy of the Bougainville and Papua New Guinea as a whole.

Any progress made on the ground so far is being closely watched by the owners, Bougainville Copper Limited as well as the National Government which still owns 19 per cent of the mine.

Deputy Prime Minister and Minister for Mining, Lands and Physical Planning Sir Puka Temu said during the 2009 mining seminar that recent developments under the joint supervisory body (JSB) in relation to the peace process on Bougainville and the commencement of the process towards discussions relating to the Panguna mine “are huge milestones” that give credit to the National Government and the Autonomous Bougainville Government for their willingness to establish lasting peace on the island.

In another plus towards progress on peace process on Bougainville, Sir Puka announced this year that the long awaited Bougainville copper agreement (BCA) would soon be reviewed in accordance with the Bougainville Peace Agreement and the National Executive Council’s decision of November 2006.

It was reported in a Mineral Resources Authority newsletter Mineral Tok, the Department of Mineral Policy and Geo-hazard Management’s priority under its corporate plan was to review the Mining Act 1992 and the Mining Safety Act Chapter 195A and the Mineral Policy.

“With the current favourable political scenario between the Autonomous Bougainville Government and the National Government, the Bougainville Copper Agreement will soon be reviewed in accordance with the Bougainville Peace Agreement and the NEC decision of November 2006,” Sir Puka told Mineral Tok.

The newsletter further reported that given the sensitivity of the issue, the National Government would ensure a transparent process was maintained with the engagement of an independent facilitator and that there is landowner participation.

“In doing so we hope to install confidence in our people on Bougainville and to have the decisions emanating from the review to be fair and justifiable to all affected parties,” Sir Puka said.

“DMPGM (Department of Mineral Policy and Geo-hazard Management has prioritised the review of the BCA under its strategic plan and will spearhead the BCA review under the JSB process in consultation with the National Co-ordination Office of Bougainville Affairs and all other relevant Government agencies,” said the Deputy Prime Minister.

 

Best in-depth information on Bougainville Copper Ltd. on The European Shareholders of Bougainville Copper (ESBC)

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