2013 Annual General Meeting
of Bougainville Copper Limited
Questions of the
European Shareholders to the board of directors:
Question 1
Under the new Bougainville Mining Legislation it is proposed to share sub-surface mineral rights with landowners and their government, what is the boards view on this proposal in regard to the existing Panguna mine?
BCL's Answer:
The mining legislation has been released in draft form. A period of public consultation is now underway. BCL will seek to ensure that its rights are protected.
Question 2
You mention in your 2012 report that it is your intention to open a representative BCL office in Arawa, how close are you to doing that and is this a prerequisite in order to commence joint social, economic, cultural & environmental studies with local stakeholders?
BCL's Answer:
BCL is hoping that the Arawa office can be established in 2013. The office will provide important support for the baseline studies that are planned.
Question 3
Assuming a satisfactory agreement for a mine reopening is reached in the planned forthcoming BCA review will the company need to raise development funds to finance a pre- feasibility and bankable feasibility study?
BCL's Answer:
The timing of commencement of any pre‐feasibility study has yet to be decided, significant work needs to be completed before a PFS can proceed, including completion of baseline social and environmental studies. Once a PFS is approved, the Board will need to raise development funds to carry out a PFS and bankable feasibility study.
Question 4
Assuming a mine reopening eventuated with BCL as the operator could you foresee an ABG and/or a Landowner representative on the board in the future?
BCL's Answer:
Equity participation and board representation by the ABG and landowners is likely to be a matter for negotiation between the parties. BCL is open to consider such participation.
Question 5
Will the Order of Magnitude Study be accompanied by EBITDA estimates of cash flow projections going forward based on current prices of gold and copper?
- Also, the sensitivity of EBITDA to prices of gold, copper and silver
BCL's Answer:
The Order of Magnitude study necessarily includes an extensive range of cash flow analysis, and sensitivity analysis across all major operational and commercial variables.
Question 6
What are BCL's thoughts on funding of the $5 billion needed for re-opening?
Would Australian Government institutions guarantee the project finance?
Have they explored funding through Bonds and Exchange Traded Funds?
BCL's Answer:
A preliminary evaluation of project funding has been instigated by the board, but this work is at a very early stage.
Question 7
President Momis has hinted: "...we believe one big mine is sufficient and if pressed we may allow for one more mine, no more."
Is the $5 billion estimated for one mine or two?
BCL's Answer:
The Order of magnitude study is based on one mine.
Question 8
Is there a plan to do exploration on the 7 leases so the most prospective of these becomes the second mine a few years after reopening Panguna?
BCL's Answer:
BCL has an exploration plan for its granted tenements which it proposes to implement when circumstances allow.
Question 9
During the last six months BOC shares suffered from ongoing abnormal trading. Which measures did you take to stop potentially fraudulent share price manipulation in BOC shares?
BCL's Answer:
BCL has no evidence of fraudulent share price manipulation.
Question 10
In this context, German investors were asked to inform Reuters about their real identity and amount of shareholding. Was this activity focussed on Germany only or worldwide?
BCL's Answer:
BCL monitors its share registry and is subject to ASX regulation with respect to any unusual activity.
Question 11
Radio New Dawn on Bougainville received support by the ABG and the Bougainville Copper Foundation to get full coverage for the entire island. The ESBC would welcome if you could provide a certain quantity of portable, rewind able receivers to schools and other public community places. Are you planning such iniative?
BCL's Answer:
Along with the ABG, BCL has supported the upgrade of the system providing radio coverage on Bougainville. Furthering ways of expanding access to radio transmission is a worthwhile initiative that will be considered.
Question 12 and 13
The Wall Street Journal reported on April 4th, 2013:
“Rio Tinto Hires Macquarie to Sell Copper Mine
Rio Tinto PLC has hired Macquarie Group to find a buyer for its majority stake in the Northparkes copper-and-gold mine in Australia, people familiar with the matter said Thursday, adding to a list of assets for sale as the mining company focuses on cutting costs and bolstering its balance sheet.
Rio Tinto valued Northparkes at US$405 million at the end of last year and would likely expect a premium for an operation where enough resources remain in the ground for mining to continue for another decade. However, subdued Asian demand for commodities and low metals prices are strengthening the hand ...”
Is there any evidence that Rio Tinto might be interested to divest Bougainville Copper Limited due to slow progress on the ground in Bougainville?
If yes: Do you believe that it actually makes sense for an interested other group from abroad to make an offer for a take-over of BCL?
BCL's Answer:
BCL has no information that Rio Tinto is considering divesting its interest in Bougainville Copper Limited.
