Porgera Mine

The Porgera gold mine is located in the Enga Province, Papua New Guinea, 600km NW of Port Moresby. It is considered one of the world’s great gold mines, operating since 1990. Placer Dome (now Barrack Gold) is the operator with 75% interest. Emperor has 20% and MRDC has 5%.

The mine is comprised of an open pit, underground operations and stockpiles, with expected mine life to 2015. Annual production is approximately 1 million oz of which Emperor's 20% share would be 200,000oz.

The Porgera deposit is located in the highlands of PNG, about 130 kilometres west of the town of Mount Hagen, 600 kilometres northwest of Port Moresby, and about 680 kilometres by road from the coastal port of Lae from which all materials are freighted. The road is partly paved and passes through unstable mountainous terrain with many major river crossings. Personnel are transported by bus, fixed wing aircraft and helicopter.

The mine is at an altitude of 2,200 to 2,700 metres where temperatures range from 10 to 25 degrees Celsius and rainfall averages 3,650mm per year. The vegetation is largely rainforest with interspersed food produce gardens below 2,400 metres elevation.

The Porgera Joint Venture (“PJV”) has approval to work the Porgera deposit within the agreed development plan under the terms of the Porgera Mining Development Contract (the “MDC”) between the Government of PNG and the Joint Venturers. The MDC specifies, inter alia, the annual rents that must be paid for the Special Mining Lease (“SML”) and the various classes of compensation that are payable to the landowners for the various land uses. The SML, which expires in 2019, encompasses approximately 2,347 hectares including the mine area and the areas in which the project infrastructure is located. There is no expiration date for the MDC, but it is tied to the continuation of the SML. Leases for Mining Purposes (“LMP”) have also been awarded by the Government for land use associated with the mining operation such as waste dumps, campsites, water supply, power generation and airstrip. PJV holds a Mining Lease for the operation of a limestone quarry for the supply of lime to the process plant. Permits are held for water use, including run-off from unconsolidated surfaces, such as the open pit, the underground mine and the waste dumps. The Environment Act (2000), which was enacted in January 2004 amalgamated all existing environmental permits into a single licence that is operative for the remainder of the project life. The PJV runs an extensive environmental monitoring program to ensure compliance with the requirements of the permit. PJV also maintains two Exploration Leases (“EL”) which enclose the SML and some key LMPs. The ELs are the subject of ongoing exploration expenditure. PJV holds Mining Easements for utilities such as power transmission lines and water supply pipelines.

The Porgera Mine is operated subject to the requirements of the PNG Mining (Safety) Act and Regulations as applied by the Mines Inspectorate. All requisite licences and permits are kept in good standing.

GEOLOGY

Mineralization occurs within the Porgera intrusive complex, around the margins of, and within, the intrusive bodies. The mineralization is closely associated with three dominant structural trends. The zone of high grade mineralization occurs within and adjacent to the Roamane Fault (Zone VII), the Hanging Wall Shear Zone (Zone VI) and the Footwall Splay Zone (Zone VIII). Significant tonnages of moderate grade mineralization also occur within the Footwall Diorite (to the north of Zone VII) and the Eastern Deeps.

The Porgera Zone VII orebody is an epithermal style orebody hosted within thermally metamorphosed sediments of the Cretaceous Chim Formation and the associated Porgera Diorite Intrusive Complex of Miocene age. The known orebody extends for up to 930 metres along strike. The maximum width across strike is 100 metres, but the width is commonly no more than 20 to 30 metres. The intrusive diorite complex has many individual stocks and dykes. The rocks are competent however they tend to be brittle, and in the vicinity of the orebody, are extensively veined and brecciated. The intrusive bodies tend to be concentrated towards the footwall of the deposit. Although underground mining continues, mining of the central portion of this zone was completed by October 1997. Much of the open pit production in 2004 was from the footwall margins of this zone.

Four precious metal associations have been recognized as part of the mineralizing events: 1. auriferous pyrite, sphalerite, galena; 2. coarse euhedral auriferous pyrite; 3. fine anhedral, auriferous, arsenical pyrite; and 4. Gold, electrum.

The fourth association is the source of the exceptionally high gold grades found in the deposit. Although a portion of the gold is free, the majority occurs as submicroscopic gold intimately associated with and disseminated throughout pyrite.

MINING & PROCESSING

The Porgera deposit is currently being extracted using open pit and underground mining methods. In 2004, mill feed, on a tonnage basis, was sourced [88]% from open pit and run of mine stockpiled ore, and 12% from underground. Underground ore accounted for 14% of the contained gold in mill feed.

Open pit mining is a typical hard rock operation utilizing 10 metre benches. The current mining fleet of 7 DML blast hole drills, 5 O&K RH200 hydraulic face shovels and 32 Cat 789 haul trucks, gives a nominal mining production capacity in the order of 62 million tonnes per annum. Waste stripping requirements reduce as the open pit mining operation approaches closure in 2008, allowing a progressive retirement of the mining fleet. During 2005 the mining fleet will be reduced to 4 DML blast hole drills, 4 O&K RH200 hydraulic face shovels and 25 Cat 789 haul trucks. This will give a nominal mining production capacity in the order of 45 million tonnes per annum. Currently ore is being mined from the 2210 metre level in Stage 4, and waste is being mined from the 2390-metre level in Stage 5. Stage 5 is the final open pit development stage and will be completed in late 2008 at the 2050 metre level. Stockpiled low grade ore will form the basis of ongoing gold production from mid 2008 until 2015. The open pit plans to deliver 5.3 million tonnes of ore to the mill in 2005, containing approximately 891,000 ounces of gold for a recovered production of 787,000 ounces of gold.

An underground mine was operated from 1989 to 1997, and subsequently maintained and developed to provide long-term drainage for the open pit, and to provide access for ongoing exploration. The underground mining operation was recommenced in 2002 to extract underground reserves in the Central and North Zones.

Primary development for the Central and North Zones consists of a footwall haulage decline/incline system from the access to the 12L DDD (Diamond Drill Drive) in the Eastern Deeps area, and a ventilation return/second egress from 0 Level. The underground mining method used is longhole bench stoping. Each stoping block has ore drives developed on top and bottom sills, which are then stripped to orebody limits where the orebody width is typically less than 8 metres to 10 metres. In wider areas of up to 15 metres to 20 metres, twin ore drives and/or pillars are used to reduce sill spans. Full height rings of sub-parallel longholes are drilled and fired into the slot, retreating along strike for the full length of the stope. The broken ore is progressively mucked to trucks on the lower level using a combination of conventional, remote and tele-remote control loader operation.

Development in the Central Zone is almost complete, with stoping expected to be finished by the end of 2005. Due to the vertical nature of the orebody, a sublevel interval of 30 metres was utilized throughout. The Central Zone stopes are in close proximity to the ultimate pit and will be completely filled to avoid any potential problems with pit wall stability.

The North Zone is being developed with 25 metre level intervals to accommodate the flatter orebody dip (50º to 55º). Strike spans are expected to be 25 metres to 30 metres. Longer stopes will be filled in stages with a combination of cemented and non-cemented fills to maintain stable hanging wall spans.

The East Zone is being planned with 12.5 m level intervals to accommodate the flatter ore body dips in this area.
The underground production fleet consists of 1 Atlas Copco H322 rockbolter, 2 Atlas Copco H352 jumbos, 2 Tamrock 1006 production drills, 2 Elphinstone R2900 loaders, 1 Elphinstone 2800 loader, 2 Elphinstone 1700 loades, 4 Elphinstone AD45 haul trucks and 3 Eimco EJC430 haul trucks.

Underground production for 2004 totalled 731,000 tonnes at 8.19 g/t, containing 192,000 ounces of gold. Development achieved for the year was 6,900 metres. Targets for 2005 include 9,600 metres of development, and the production of 750,000 tonnes of ore containing approximately 202,000 ounces of gold, contributing some 175,000 ounces recovered production.

The mill has undergone four stages of improvement and expansion. Stage I, comprising a concentrator and leach/carbon-in-pulp (“CIP”) circuit commenced operations in September 1990, producing gravity concentrate and sulphur flotation concentrate for leaching to recover gold and silver. Stage II was commissioned in October 1991 and involved the processing of the sulphide flotation concentrate and previously stockpiled Stage I concentrate in a pressure oxidation circuit. Gold liberated by pressure oxidation is recovered through a CIP cyanide leach circuit, followed by site refining into doré. In September 1992, Stage III was placed in commercial production. This stage expanded both the underground mine and mill facilities. Stage IV-A of the project commenced operation during October 1993, further expanding mining operations and the mill facilities. Stage IV-B, completed in the first quarter of 1996, added a second semi-autogenous (“SAG”) mill and large ball mill, to increase nominal mill throughput from 10,000 tonnes per day to 17,700 tonnes per day. This expansion included a 350 tonnes per day oxygen plant, a 150 tonnes per day lime kiln and increased flotation and leaching capacity. Process water storage and the Hides power plant generation capacity, together with other infrastructure were also increased to support this expansion. The open pit mining fleet capacity was expanded in 1997 from 150,000 tonnes per day to 210,000 tonnes per day to provide for the increase in mill feed. In 1999, a further flotation expansion was installed to improve recoveries, and additional oxygen capacity was added to increase autoclave throughput. Four Knelson concentrators were installed in 1999, to remove free gold ahead of the flotation circuit. In 2001, an Acacia reactor was commissioned to treat the Knelson concentrate, and modifications were made to the grinding and CIP circuits. During 2003 a contract secondary crusher was installed to increase the capacity of the milling plant and allow a better match between milling and oxidation capacity for the period 2004 to 2006.

The main water supply for the mine is the Waile Creek Dam, located approximately 7 kilometres from the mine. The reservoir has a capacity of approximately 717, 000 cubic metres of water. Water for the grinding circuit is also extracted from Kogai Creek, which is located adjacent to the grinding circuit. The mine operates four water treatment plants for potable water and five sewage treatment plants.

Porgera's principal source of power is supplied by a 73-kilometre transmission line from the gas fired and PJV-owned Hides Power Station. The station has a total output of 62 megawatts (“MW”). A back up diesel power station is located at the mine and has an output of 13MW. The average power requirement of the mine is about 60 MW. Average annual power consumption is 518 GWh

EXPLORATION & DEVELOPMENT

Exploration plans in 2005 have a two pronged approach. The majority of the drilling will be carried out within or adjacent to the current mine infrastructure. There are a total of seven known targets that are possible extensions of either known zones or areas with at least some previous drilling. This drilling is designed to bring these target ounces to an indicated mineral resource status. There are also some targets that are less well known and more conceptual in nature.

In addition, in 2005 a project termed Porgera Deep Minex will be initiated. This consists of a multi disciplinary approach to determine targets and test the volume of ground below the known Porgera deposits. This approach will involve the building of an integrated geological and geophysical model, various geochemistry techniques, and the use of seismics is to be investigated. Much of this will be the “mining” and integrating of existing data. Drilling will be carried out with a prime target being the intersection of the Roamane Fault and the North Zone shear at depth.

ENVIRONMENT & CLOSURE

The Porgera mine is located in extremely rugged mountainous terrain, subject to seismic activity, high rainfall and landslides. In such conditions construction of a tailings impoundment would be very difficult and the risk of an engineering failure high. Therefore the PNG Government approved riverine disposal as the most appropriate method for treated tailing and soft incompetent waste rock. Competent rock is stored in stable waste dumps.

The mine follows a government approved Environmental Management and Monitoring Program. The mine has at all times been in compliance with government approved criteria.

In 1996 an independent study was undertaken by the Commonwealth Scientific & Industrial Research Organization (“CSIRO”), an Australian based independent research organization, to assess the mine's impact on the downstream river system and local people. The study resulted in a report titled “Review of Riverine Impacts”. The report made certain recommendations to the PJV that have either been implemented, are in the advanced stages of implementation or rejected due to their impracticality. An advisory group, called the Porgera Environmental Advisory Komiti ("PEAK"), was formed as a result of the CSIRO recommendations. PEAK comprises representatives from the PNG government, PNG and international NGO groups, Placer Dome (PNG) and independent technical experts. The primary function of PEAK is to enhance understanding and provide transparency of Porgera’s environmental (physical and social) issues with external stakeholders and to assist in reviewing its environmental performance and public accountability. In 2004 PEAK’s terms of reference were reviewed and expanded to include the review of issues of sustainability as the mine moves towards closure.

At December 31, 2004, the fair value of reclamation and environmental related post-closure costs for Porgera, under FAS 143 guidelines requiring the use of third party contractor costs and based on liabilities incurred to date, were estimated to be $32 million. The Corporation has accrued Placer Dome’s 75% share ($24 million).

ORE RESERVES & MINERAL RESOURCES

By reference to the Placer Dome (Barrick Gold Corporation) statement dated at 31 December 2005, the Reserves attributable to Emperor totals 1.62 million ounces. The total Mineral Resources attributable to Emperor contains 2.69 million ounces.