Mayur Resources

Developing an industrial minerals and power generation platform in Papua New Guinea



Mayur Resources holds a unique portfolio of resources and energy projects in Papua New Guinea (PNG) – a Pacific island state which it believes offers significant and unrecognised potential as a developing nation on the doorstep of several major economies across the Asia Pacific (APAC) region. The company’s diversified portfolio encompasses a pipeline of exploration and development projects across industrial minerals, cement, power generation, coal, copper and gold – many of the key building blocks for a developing country. Mayur’s executive management team benefits from extensive strategic and operational expertise across the resources sector, with executive director Tim Crossley and managing director Paul Mulder offering +20 years of experience across a broad range of commodities. 


“We essentially have a management team with an experienced leader in each business division, for example we have a CEO of lime and cement, COO in mineral sands and an executive in power generation,” Mulder tells RGN. 


We’ve been able to build a team of respected, proven individuals who bring demonstrated capability in their respective fields of expertiseYes, we have a diverse portfolio but we’ve been able to construct a nimble and highly resourceful team together with an outcomefocused approach. 


Papua New Guinea 


PNG has been recognised by Mayur as an increasingly attractive jurisdiction to operate in for several reasons: It has proven mineral potential and a well-established mining sector, with supportive government, a stable legislative environment and favourable fiscal and tax regimes all set against a backdrop of sustained population growth. 


PNG offers a huge amount of opportunity given that it is underdeveloped when you compare it the rest of its APAC neighbours and its first world neighbours such as Australia and New Zealand. 


With an electrification rate of just 13% of the population, there has been limited economic development in PNG compared to what there could be if they had an electrified nation, and that is where we see a big opportunity,” Mulder adds. 


PNG’s medium-term economic outlook is described as ‘optimistic’ by the World Bank, and having hosted the APEC Leaders Summit in 2018, investment in large-scale resource projects is set to continue underpinning economic growth in the country.  


The government has also made a strong commitment to diversify the economy away from just the next LNG or mining mega-project, and towards new growth sectors which will play a vital role in the nation’s development. 


This diversification will give rise to additional opportunities within each of those sectors where energy and building materials are fundamental, which is where our focus is – industrial minerals and energy. 


The government has also fostered a distinct pro-investment environment in recent years, driven largely by the state-run Investment Promotion Authority, which encourages foreign investment across a wide range of sectors, including resources. 


“The government is very focused on attracting investors and having them stay for the long term. In the past they have offered very attractive incentive packages to attract capital. We operate in a world where there is competition for capital which is globally mobile, and it will gravitate to jurisdictions that provide the best risk-reward returns” says Mulder. 


Central Cement and Lime project 


Mayur’s flagship project is the Central Cement and Lime (CCL) project, a new vertically integrated cement project, based on two large scale, high quality limestone deposits near PNG’s capital Port Moresby. 


A definitive feasibility study (DFS) was completed for the CCL project in January 2019 with very attractive economics, including a post-tax ungeared NPV of US$352 million, an IRR of 23.9% and project payback of 5.2 years. The project offers a range of final cement and lime products targeting  both domestic and export markets. 


Life of project revenue has been estimated at $4,792 million with EBITDA of $3,540 million over an estimated 30-year project life. The project hosts over 380 million tonnes (Mt) of limestone resources and a maiden ore reserve of 78Mt has also been declared. 


“I think this DFS demonstrates the significant value that is currently residing latent in PNG that can be realised via ongoing support from the government, the community and developers coming together to unlock the opportunity, not only to displace PNGs current reliance on imports, but also to establish a new export industry.” 


With a MOU signed for gas supply from the nearby ExxonMobil PNG LNG plant, Mulder’s excitement centres on the fact that CCL is a ring-fenced project that is not reliant on any other inflows from outside PNG.  


In doing so, the project will provide a much cheaper cement and lime product for the domestic market, while also emerging as an extremely competitive alternative supply source in other nearby markets such as Australia and New Zealand, which currently import around 45% of their needs from Japan, China and Vietnam. 


“We are three times closer than these countries when you look at proximity to the market in Australia and New Zealand. That is not just a little bit closer, it is order of magnitudes closer to that market,” Mulder stresses. 


The market is sophisticated and will look at diversity of supply, security of supply and at the same time it will be making sure it has access to cheap, high quality, reliable inflow of cement and lime, and that’s what we are going to provide. 


Next steps for the CCL project will see Mayur conclude compensation agreements with the local community, submit a mining lease application in H1 2019 and award EPC design and engineering contracts, while finalising product offtake and project financing arrangements by H2 2019. 


Mineral sands 


Mayur is also developing a new industrial and mineral sands province in PNG, holding a portfolio of tenements that stretch across PNGSouthern coastline and delta regions of the Gulf of Papua. This extensive portfolio provides potential for multiple products and routes to market. 


The most advanced mineral sands project is at Orokolo Bay, where a pre-feasibility study (PFS) has been completed which identified an opportunity to produce fine grain construction sands, titanomagnetite (iron sands) and a zircon‐rich valuable heavy mineral concentrate by‐product. 


At the start of 2019, Mayur secured up to $25 million in funding from China Titanium Resources Holding Limited (CTRH) for the development of the pilot plant and full-scale operation at Orokolo Bay in return for up to 49% of the mineral sands portfolio. 


The deal is an attractive one for Mayur, as it essentially provides a pathway where its partner will develop and fund the project while Mayur maintains 51% of the $106 million NPV that was demonstrated by the PFS. 


“We retain around $53 million of the Orokolo Bay economics, which is just shy of our current market cap. So, that one deal essentially reflects the market cap of the company, but it should also be noted that Mayur also keeps 51% of all the other mineral sands projects in the portfolio.  


“We have several other projects we will be developing across our tenement area, But the key thing is we have an experienced, proven, low cost mineral sands developer and operator in CTRH, to help bring our projects into production.” 


Subsequent to the above, in another important company development Mayur also recently announced the signing of a first binding offtake agreement with a separate Chinese steel group for up to 40% of the vanadium-titano-magnetite product from Orokolo Bay. 


Power Generation 


As previously alluded to by Mulder, PNG’s power generation industry is characterised by a lack of access to electricity for most of the population, and the power that is generated is not only expensive, being dependent on imported liquid fuels, but unreliable too given the lack of investment. 


Sensing an opportunity to improve the quantity and quality of electricity supply in PNG, Mayur is developing an environmentally sustainable Enviro Energy Park (EEP) in the city of Lae, the country’s industrial and manufacturing hub in Morobe Province. 


The energy source for the Lae EEP Power Project comes in three different forms in the shape of solar, woodchip biomass and coal, making it a reliable and low carbon source of electricity. 


We have access to PNGs own domestic coal resources, which is an extremely low ash, low sulphur type that is a lot cleaner than the coal Australia uses for its own power generation needs. Another key differentiator of the project is that it also produces steam as a by-product, which will be produced extremely cheaply and offered to industrial users in Lae.” 


These industrial users are currently burning heavy fuel such as diesel for their electricity needs, which is highly polluting and very expensive versus using Mayur’s steam by-product. Therefore, this alternative has both an economic and environmental benefits for the users in Lae. 


Our multifuel technology for the EEP reduces energy costs by more than half compared to the current practice of burning imported heavy fuel, and at the same time it drastically reduces localised air emissions, in terms of noxious gases, as well as the CO2 footprint.” 


Should all the aforementioned projects reach final investment decisions, Mayur’s positive impact on PNG will be tangible, not only in stimulating the economy and boosting employment, but also from adding value and keeping wealth in-country. 


The delivery and construction stages of these projects will create employment that will then transition into the operational phases. But the wider benefits will be from the multiplier effect of cheaper power and cement that will flow across the economy over the +30-year life of the projects,” says Mulder. “The flow on benefits will also extend indirectly to education, health and standards of living.” 


Finally, with Mayur’s market capitalisation currently sitting well below $100 million, Mulder believes there is a significant opportunity for upward movement in the company’s share price as these projects are advanced and ultimately commence revenue generation.