Papua New Guinea is not often spoken about as a premier mining jurisdiction, but with a swathe of majors active in the region, a mining-friendly government looking to bolster the minerals sector, and several untapped resources, the small country is rife with opportunity.  

The region is already home to some of the world's biggest gold mines, such Barrick's Porgera, Newcrest's Lihir, and Ok Tedi's namesake mine, and K92 Mining's Kainantu project has been a major recent success story in the country. 

ASX-listed Tolu Minerals is looking to replicate the success of K92 by redeveloping the abandoned Tolukuma mine near Port Moresby, with first production only a matter of months away.  

Managing director and CEO Iain Macpherson told Mining Journal's sister publication Mining News at the Gold Forum Americas 2024 in Colorado Springs this week Tolukuma had languished due to neglect by its precious owners, but Tolu had taken the steps to breathe new life into the "incredibly valuable" high-grade asset. 

The primary issue for the mine under its previous ownership was costs; while it produced around one million ounces at 15 grams per tonne gold over its 20-year life, there was no access road and the mine was fully helicopter-serviced.  

When the hydropower station at the mine failed and was never fixed, the previous owners relied on costly diesel, too.  

These are two of the main issues Tolu is making an effort to address.  

It has started building the access road, which is due for completion by the end of the year. 

"We estimate that the operating costs will reduce by a factor of 30 once the road is built through," Macpherson said. 

Tolu will then look to fix up the old hydro station and refurbish the gold plant, and it has a view to restart gold production by the end of the year.  

With $11.6 million in the bank at the end of June, Macpherson said Tolu was fully funded to restart production, and once up and running, its cash flows from operations would fund the rest of its development plans.  

Leveraging the success of peers 

While Tolukuma has its own set of opportunities and challenges, it's often likened to the early stages of K92's Kainantu mine, which it bought from Barrick gold in 2015 for US$2 million plus up to $60 million in milestone payments.  

K92 today has a market cap of A$2 billion.  

CEO John Lewins outlined at GFA 2024 how the company had grown measured and indicated resources by around 1100% and inferred resource by nearly 800% since 2017, with near-term plans to reach a production run rate of between 450,000 and 500,000 ounces per year.  

Effectively, K92 bought an abandoned asset that it believed held deep value and spent years proving its thesis. 

Much like what Tolu is looking to do a Tolukuma.  

Macpherson said the company often spoke with K92 and was "shamelessly" learning from its peer's mistakes and successes to bring the best out of Tolukuma. 

"We're following some of K92's catalysts very carefully," he said.  

"We're really seeing the value of what K92 has done, both in terms of moving the project and the business, but also in terms of how they're seen by the government." 

And this government view is important for Tolu: because of K92's success, Macpherson said the PNG government was highly supportive of the Tolukuma development work.  

"K92 is highest taxpayer in the country. They're seen as model ESG citizens, and we're benefiting from that, because the government sees us as a as a similar operation, and they want us to be similarly successful." 

While Papua New Guinea may not be the most well-known region, Macpherson said it was a "fabulous" — albeit not well spoken about — area for mining.  

Of course, while regulatory risks may not be pervasive, Papua New Guinea still carries risks in other ways. Just this week, conflict between rival tribes killed dozens of people near Barrick's Porgera mine, including two Barrick employees.