Australia’s largest listed gold company by market capitalization, Newcrest Mining (ASX:NCM), said Tuesday it had to suspend production at its flagship Lihir mine in Papua New Guinea, as protests from a local landowners’ group keep escalating.
The announcement sent Newcrest stock down as much as 92¢, or 3.4 per cent, to $26.30 in trade.
According to FT.com, the decision of halting operations at Lihir, one of the biggest in the world and the subject of a $1.3 billion expansion, followed a Lihir Mining Area Landowners’ Association (LMALA) action, which consisted of placing taboo markers around the site.
“The markers are a traditional way of raising grievances and disputes related to the operation of the mine, located on the island of Niolam, 900km north of Port Moresby,” reports FT.com (subscription required).
When the plant is placed around company land in Lihir Island, it signals to everyone that the lot is off limits and that talks are needed.
Newcrest is in the middle of a five-year review of the integrated benefits package for local stakeholders at the mine that includes direct compensation arrangements for landowners.
Newcrest posted a record profit of $1.12 billion in the year to June, up 23 per cent from the previous year, helped by soaring gold prices, which hit a peak of $1,900 in September 2011 and have since fallen to about $1,600.
Newcrest acquired Lihir Gold for $9.5 billion in August 2010, creating the world's fourth-biggest producer of the precious metal.
The company said it expected gold production to rise 5 per cent in 2012-13 to 2.3 million to 2.5 million ounces.
MINING.com reported in July that Newcrest Mining is the Australian mining firm exposed to the greatest level of country risk, with 63% of its assets situated in nation-states categorized as 'very high-risk' by analysts.