RTZ to raise dollars 107m from Papua stake

RTZ, the mining group, plans to raise dollars 107.7m by selling a large stake in one of the world's biggest undeveloped gold prospects, the Lihir project in Papua New Guinea, writes Russell Hotten.

The company is selling 19.99 per cent to Venezuelan Goldfields, in Canada, and 16 per cent to RTZ's partner in Lihir, Niugini Mining. The Papua New Guinea government holds a 30 per cent stake.

Lihir is considered the largest undeveloped gold prospect outside South Africa, with mineable reserves of 13.7 million ounces.

However, this is well below the 42 million ounces talked of when the project was started in the 1980s. RTZ, which retains 20.01 per cent in Lihir, said it had wanted to scale down its interest for more than a year.

But RTZ will continue to manage Lihir on behalf of the joint venture participants through a wholly owned project management subsidiary.

The company is expected to use the cash to reduce debt following the pounds 800m cash purchase of two mining operations in the US earlier this year.

The project has proved technically difficult because the Lihir site is near a volcano. However, mining is expected to begin in 1994.

The venture plans to process 2.8 million tonnes of ore a year, producing an average 620,000 ounces of gold annually over the first 12 years.