Papua says it will seize RTZ stake: Row over gold mine project escalates

RTZ Corporation's future in one of the world's largest gold mine projects, in Papua New Guinea, was in doubt last night when the government said it would sieze 50 per cent of the venture.

Paias Wingti, the Prime Minister, accused RTZ of delaying the Lihir project, and declared the Government's intention to sell on 20 per cent of its stake to another developer, thought to be the Malaysian Mining Corporation.

RTZ said it was surprised but would not get into a public row with the government. 'We will be considering the position with our partners as soon as practicable,' a spokesman said.

Mining analysts said RTZ would not be seriously damaged if it pulled out of the venture. 'Lihir has potential but it is not vital to RTZ in the great scheme of things,' one said. 'But it sends bad signals to other companies mining Papuan mineral reserves.'

The move was prompted by RTZ's decision this week to reduce its interest in Lihir, but retain management control of a project said to be the largest gold mine discovered outside South Africa this century.

Lihir, which has mineable reserves of 13.7 million tonnes, is currently 80 per cent owned by RTZ and 20 per cent by Niugini Mining, which in turn is 56 per cent owned by Texas- based Battle Mountain Gold.

On Monday RTZ said it was selling two tranches of shares for pounds 72m in a deal that would cut its stake to 20 per cent. One tranche went to Niugini. The other went to Venezuelan Goldfields, a sale that raised eyebrows among analysts who felt the small Canadian company could bring little to the Lihir project.

RTZ said a year ago it wanted to reduce its exposure to Lihir and bring in a third party to defray costs.

The Papua New Guinea government vehemently criticised the lack of consultation, and said RTZ was warned it would raise its stake to 50 per cent if the company did not bring in a satisfactory third-party partner.

(Photograph omitted)