PNG OVERVIEW www.mineral.gov.pgSNAPSHOT

3 - MAJOR MINES; ……………………………………Ok Tedi, Lihir, Porgera1 – u/g MINE;……………………………………………Tolukuma1 – u/g MINE UNDER CONSTRUCTION;…………...Kainantu2 - PROJECT UNDER FINANCING STUDY………...Ramu, Simberi1 - PROJECT UNDER PRE-FEASIBILITY…………..Golpu2 - FEASIBILITY STUDIES WITH DoM……………...Hidden Valley, Sinivit

- EXPLORATION ON 92 LICENCES, DRILLING ON 8 EL’S

LIHIR

PNG GOLD ,SILVER &COPPER PRODUCTION1972-2004.

-

50,000

100,000

150,000

200,000

250,000

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Copper(t)

Silver(kg)

Gold(kg)

New mine start up

B O1 PMO2 T L 73.5T AU 2004

2002 - 2004 PNG GOLD PRODUCTION

-

5,000.0

10,000.0

15,000.0

20,000.0

25,000.0

30,000.0

35,000.0

OK TEDI PORGERA MISIMA LIHIR TOLUKUMA SMALL SCALE

kg

2002

2003

2004

2003 GOLD PRODUCTION FROM THETOP 10 PNG & AUSTRALIAN MINES

0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000

Super Pit

Porgera

Groundrush Gold

Lihir

St Ives

Ok Tedi Cu/Au

W Kalgoorlie

Sunrise Dam

Ridgeway Au/Cu

Dead Bullock

ounces

E X P O R T V A L U E IN U S $

-

2 0 0 .0

4 0 0 .0

6 0 0 .0

8 0 0 .0

1 ,0 0 0 .0

1 ,2 0 0 .0

1 9 9 0 1 9 9 1 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3

US$

MIL

L

M e ta lsO ilA g r ic u ltu reF o re s tM a r in eO th e r

12 mth COPPER

EAST SEPIK

I R I

A N

J

A Y

A (

Indo

nesi

a)

Current Exploration Licence

MinisterialReserve

Licences Key

0

SOUTHERN HIGHLANDS

ENGA

WESTERN

&100 200 km

WEST SEPIK

N

SO

EAST NEW BRITAIN

NEW IRELAND

ORO

WEST NEW BRITAIN

MOROBE

MADANG

CHIMBU

GULF

EASTERN HIGHLANDS

WESTERNHIGHLANDS

MANUS

Exploration LicenceUnder Application

Exploration Licence Under Renewal

P A P U A N E W G U I N E AC u r r e n t E x p l o r a t i o n L i c e n c e s t o D e c e m b e r 3 1 , 2 0 0 4

CENTRAL

MILNE BAY

1212

1315

10931024

1344

1312

1373

1329

1375

1391

5811337

1339 1350 1349

454

858

1235

1308

1382

133758

1313

1330

1309

1115

1304

1311

1320

1343

1353

1376

1326

13841341

470

693 1049

193

1335

13341342

1370

13161365

1178

1103

1369

4401105

1352

13631371

1340

1377

1193677497 1305

13781380

12921332

1348

8941379 1390

580 6831333

1366

1264

1271

12841297

1327

1028

1383

1386

1359

1374

1307

1196

609

1355

13671372

1385

13611324

1070

1243

1165

1360

1368

1323 1347

1025

11401356

1362

1043

1322

1077

1345

10691091

1388

13811170485

1021

1331

1357

1358

1387

1279

1172

1346

1389

1351

GRANTED EL’s, Cu & Au prices

0

50

100

150

200

250

65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99

2001

2003

0

100

200

300

400

500

600CURRENT EL'S (incunder renewal)

US$/oz (RHS)

Cu USc/lb

www.mineral.gov.pg

EL APPLICATIONS PER YEAR

0

10

20

30

40

50

60

70

80

90

82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04

0

50

100

150

200

250

300

350

400

450ELA's (LHS) GOLD in US$/OZ COPPER in USc/lb

NUM

BER

of A

PPL

ICAT

IONS

E X P L O R A T IO N E X P E N D IT U R E IN U S $

0

1 0

2 0

3 0

4 0

5 0

6 0

7 0

8 0

9 0

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

US$

mill

ions

U S $ A D V A N C E D G R A S S R O O T S

E X P L O R A T IO N E X P E N D IT U R E L E V E L S IN P N G 1 9 7 5 - 2 0 0 4

0

0 . 5

1

1 . 5

2

2 . 5

3

3 . 5

4

4 . 5

5

1 9 7 5 1 9 8 0 1 9 8 5 1 9 9 1 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 40 . 0 0 %

0 . 0 5 %

0 . 1 0 %

0 . 1 5 %

0 . 2 0 %

0 . 2 5 %W O R L D W ID EE X P L O R A T IO N IN U S $ B n

% o f W O R L D W I D EE X P E N D IT U R E

G L O B A L D A T A T O 2 0 0 0 F R O M J A M E S O T T O ; 2 0 0 0 - 0 4 F R O M M E T A L S E C O N O M I C G R O U P

ASX LISTED CO’s OPERATING IN PNG

RIO

PDG

LHGDRD

HPLBOC

MMN

OMH

ALDTGD

0.1

1.0

10.0

100.0

10,000,000 100,000,000 1,000,000,000 10,000,000,000

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34YEARS

TOLUKUMA

PORGERA

OK TEDI

LIHIR

KAINANTU

SIMBERI

HIDDEN VALLEY

WAFI

GOLPU

RAMU

FRIEDA

OPTIMISTIC PROJECT START UP & MINE LIFE

YEARS UNTIL START UP

EXPECTED LIFE

TWO SCENARIOS FOR PNG Cu & Au PRODUCTION 2003-2013

0

10

20

30

40

50

60

70

80

90

100

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Tonn

es A

u

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

New Mines

Optimistic Tonnes-Au

Base Case Tonnes Au

Base Case Tonnes Cu

OptimisticTonnes-Cu

K S+HV

W FTonnes C

u

ACCRUED ATTRIBUTABLE EXPLORATION EXPENDITURE IN KINA ON CURRENT EXPLORATION

LICENCES

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

400,000,000

450,000,000

AUST S AFRICA CANADA PNG KOREA

Potential New Mines

Kainantu Gold Project – prod’n early 2005, 10 yrs @ 115,000 oz paMorobe Gold Project – possible production 2005, 9 year mine life at 310,000 oz Au, 5.2 m oz Ag pa Simberi Gold Project – 2005, 8 yrs at 40,000 oz paSinivit Gold Project – 2005, 6 year mine life at 20,000 oz paRamu Ni/Co Project – 33,000t Ni & 3,200t Co pa, long life

GOVT’S FISCAL(TAX) INCENTIVES

Income Tax Rate Uniform 30% for all mining companies, reduced from 35% for SML holders but 25% from smaller ML holdersDividend Withholding Tax Rate10%Accelerated Depreciation Allowance 25% declining balance depreciation pool for all assets for new minesRoyalty Rate2% paid to mine landownersDeductions of Exploration Expenditures 200% for all exploration costs incurred after 1/1/03Additional Profits Tax AbolishedRing Fencing Relaxed to allow for 25% of pool of off-lease exploration costs to be deducted for tax purposes provided tax payable is not reduced by 25%Mining Levy NoneCapital Gains Tax NoneState Equity Under Review by GovernmentFiscal Stability Optional at 2% premium

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

China

Indonesia

PNG 1999

Ivory Coast

Mexico

Ontario

Uzbekistan

Bolivia

Tanzania

Kazakhstan

Ghana

Greenland

Peru

Nevada

PNG 2002

West Aus

Zimbabwe

Argentina

Chile

Philippines

South Africa

Sweden

IRR (%)

2002 TAX REVIEW

FRASER INSTITUTE INVESTMENT ATTRACTIVENESS

0

10

20

30

40

50

60

70

80

90

100

NZIN

DIAZIM

BPHILS

ECUADORGHANA

VENKAZ

INDONPNG

COLOMBIA

ARTINA

RUSSIASAF

CHINA

BOLIVIA

MEXBRAZIL

PERUAUSTCHILE

1. Policy and Regulation ComponentCLEARER & UP TO DATE GUIDELINES

2. Exploration and Mining Technical AuditsBETTER CORPORATE COMPLIANCE THRU MONITORING

3. Mineral Tenements Management ComponentMORE CUSTOMER FRIENDLY, FASTER

4. Sustainable Development ComponentREDUCE LANDOWNER DISCONTENTBETTER FINANCIAL GOVERNANCE

5. Geological Survey ComponentNEW DATA, BETTER CUSTOMER ACCESS TO DATA

6. Internal Revenue Commission ComponentIMPROVED UNDERSTANDING OF THE MINING SECTOR, INCREASED REVENUE COLLECTION

WORLBANLOA

Digitisation of geochem data

& geological maps

10 2

km

Digitisation of geophysical data

www.mineral.gov.pg

SYSMIN PROJECT IN PNG – 50M EURO Funding commitment to fixed projectsFORMULATION OF A MINING WASTE MANAGEMENT POLICY 0.7

INDEPENDENT EVALUATION OF DEEP SEA TAILINGS PLACEMENT 1.5

CONSTRUCTION OF A NEW MINING HAUS 3.9

SMALL SCALE MINING VOCATIONAL TRAINING CENTRES 6.2

AIRBORNE GEOPHYSICAL SURVEY 16.1

GEOLOGICAL MAPPING & MINERAL POTENTIAL ASSESSMENT 13.8

GEOLOGICAL & MINERAL RESOURCES INFORMATION SYSTEM 1.1

9

5

Area 1

12

46

78

20 19

18

3

10

1112

14

1516

17

8

1

13

2

Area 2

3

6

5

7

4Port Moresby

Lae

Madang

Wewak

Vanimo

TabubilWabag

Mt. Hagen

Kerema

Kainantu

Popondetta

Alotau

Lorengau

Kavieng

Namatanai

Rabaul

BiallaHoskins

Kandrian

Wau

Goroka

Fig.1 - Geology of PNG and location of the airborne geophysical survey areas (red)

SYSMIN GEOPHYSICAL WORK AREAS

JAPANESE INVOLVEMENTS

MMAJ’s EXPLORATION AT KAINANTU LEASE WITH HIGHLANDS PACIFICJAMSTEC’s INVOLVEMENT IN MARINE SCIENCE RESEARCH, ALSO THROUGH SOPACVOLCANIC & SEISMIC MONITORING EQUIPMENTSJSDF FOR SMALLSCALE MINERS THROUGH WORLD BANKPURCHASE OF OK TEDI COPPER

JAPANESE INVOLVEMENTSSmelter in Japan Period Qantity

(dmt)Nippon Mining & Metals Co. Ltd

2002-2008 40,000

Mitsui Mining & Smelting Co. Ltd

2002-2008 40,000

Pan Pacific Copper Co. Ltd ***

Spot tonnage

20,000

Mitsubishi Materials Corporation

2002-2008 70,000

Sumitomo Metal Mining Co. Ltd

2002-2007 40,000

Furukawa Company Ltd 2002-2007 20,000

Dowa Mining Co. Ltd 2002-2006 20,000

Nittetsu Mining Co. Ltd 2002-2007 10,000

Total 260,000

POSSIBLE AREAS OF JAPANESE INVOLVEMENTS

MORE MINERAL EXPLORATION IN PNGASSISTANC IN MARINE SCIENCE RESEARCH AND SEABED MININGVOLCANIC & SEISMIC MONITORING ASSISTANCE FOR SMALL SCALE MINERS CONTINUED PURCHASE OF OK TEDI COPPER AND FUTURE GOLPU, FRIEDA & BOUGANIVILLE COPPER