Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Bougainvilles Panguna Copper/Gold Mine to reopen?

Bougainville's Panguna Copper and Gold mine rates as one of the most complex and intriguing gold and copper mine stories dating back to its inception as a mine back in the early 1970's, building the mine was a sheer marvel of modern engineering at the time, literally taking the top off a mountain located in the middle of dense jungle terrain.
 
When the Bougainville Copper Limited (BCL) mine was closed in 1989 due to sabotage from former Bougainville employees and BRA (Bougainville Revolutionary Army) members due to mine royalty disagreements (amongst other tensions) it was the largest open pit mine in the world.........it was big! 

Proving just how large the mine project was in its heyday there is even a website that is devoted to the former workers of the mine and the long lasting friendships between "mates" that worked in such an inhospitable environment creating such a mammoth mine, riverbendnelligen.com.

Those of you in your 30's or older such as myself may only remember intermittent news stories of constant bloodshed in Bougainville due to a civil war lasting approximately 15 years centred around a fight for independence in which the Panguna mine was one of many issues culminating in the loss of thousands of lives of Bougainvilleans and PNG defence force personnel. Those of you in your 20's may never have even heard of Bougainville, let alone the Panguna mine, those of you who are considerably older may remember Bougainville was a key location where American and Australian troops helped fight off the Japanese in WW2.

To cut a long story short, the mine has been closed for 21 years and to this day BRA soldiers still guard the mine preventing anyone from entering the mine site other than BRA approved persons. Current estimates of the companies mining tenement reserves according to Bougainville Copper Limited (BCL) are approximately 1 billion tonnes containing approximately 0.3% copper and 0.4% gold, although not of the highest grade copper content the size of the resource more than compensates for the grade, and given current gold prices you could well argue that this would primarily be a gold mine with copper credits!

Over the last several months the current "closed mine" policy has dramatically appeared to change, elections in Bougainville back in June resulted in a new president of Bougainville being elected to replace former BRA member and president of Bougainville, James Tanis. The new president, The Honourable John Momis (a former priest and PNG minister of Parliament), was democratically elected by the people of Bougainville in what was widely reported as a peacfull and fair election process.

In only two short months of being in office Momis has shown himself to be a formidable proponent of re opening the Panguna mine as a means to substantiate Bougainvilles autonomy from PNG and ultimately the economic base to support Bougainville as a fully fledged independent nation by 2015, It would probably be fair to say that the rebuilding of the Panguna mine would coincide with the rebuilding of a nation formally economically crippled by civil war.

Things have progressed so quickly that even the owner of the mining lease and former mine operator, Bougainville Copper Limited (BCL) has announced to the market (trading on the ASX as stock symbol BOC) that the government of Bougainville "has shown early signs that it is interested in reopening the mine provided local land owners are in agreement".

The next stage is for the traditional landowners to form a collective in which the BCA (Bougainville Copper Agreement) will be discussed, plans are afoot to commence this before years end, plans are also underway for the Panguna mine affected landowners to visit operating mines in the country to see how the mining industry has developed from the experiences of the once world class mine.
The mines planned to be visited include Lihir in the New Ireland Province, Porgera in the Enga Province and Ok Tedi in the Western Province

Currently shares of BCL trade in the USA under stock code BOCOF, on the ASX in Australia under stock symbol BOC and in Frankfurt Germany under stock code BOU1. BCL was also trading in the USA under an ADR (deposit receipt) arrangement though this formally ceased earlier this year, currently shares trade at around 75 cents.

There is a large number of European shareholders on the register and they even have their own website, bougainville-copper.eu, dedicated to the company which provides the latest news from Bougainville on a daily basis. According to their website "Bougainville Copper Limited (BCL) has 401.062.500 shares outstanding. More than 70 percent of these shares are owned by Rio Tinto or the Independent State of Papua New Guinea. Almost 30 percent of the shares are traded on international stock markets, mostly in Sydney and Frankfurt/Germany."

One could write a book on the Panguna mine and Bougainvilles civil war, though SA would not be the place for such a thing, with this in mind i would refer any readers who are interested in knowing more about the Panguna mine to check out the exceptional analysis of professional investor Sven Lorenz at Undervalued-Shares.com, where you will find the most intricate in depth valuation model/s of a possible restarted Panguna mine.

In closing i suggest that there would not be many instances today in which you would be able to invest in a 1 billion tonne copper/gold resource at pennies in the dollar and simultaneously underpin the future development of a nation such as Bougainville should the Panguna mine be reopened.




Disclosure: Long Bougainville Copper Limited (BOC)