(Updates to add closing shares in fourth paragraph.)
Aug. 18 (Bloomberg) -- An abandoned mine with a potential copper and gold resource worth more than $60 billion is in play after Rio Tinto Group said it’s reviewing its controlling stake in the company that owns the deposit in Papua New Guinea.
Laws passed this month by the provincial government of Bougainville prompted the review of Rio’s 53.83 percent stake in Bougainville Copper Ltd., the London-based company said today in a statement.
Bougainville Copper’s main asset is the Panguna mine, on Bougainville Island, which was shut by local protests in 1989 amid unrest that included attacks on staff and operations, according to company filings. Reopening the mine may cost more than $4 billion, Papua New Guinea’s then-prime minister Michael Somare estimated in December 2010.
The Port Moresby-based company surged 18 percent to 47 cents in Sydney, giving it a market value of A$188.5 million ($176 million), the highest in two months. Rio was little changed. Bougainville Copper last year estimated the resources in the ground at Panguna at 5.3 million metric tons of copper and 19.3 million ounces of gold. That’s worth $61.5 billion at today’s prices.
Should Rio opt to sell the stake, the company has shown it’s “adamant that it isn’t giving away assets cheaply at the moment,” Adrian Wood, a Sydney-based analyst at Macquarie Group Ltd. said by phone. “If they don’t get the value here, they are not going to give it away.”
The world’s second-biggest mining company opted to keep its diamond businesses after failing to find a buyer and deciding not to pursue an initial public offering of the unit, it said last year. It also dropped a possible sale of its Australian and New Zealand aluminum unit.
Bougainville’s autonomous parliament said in an Aug. 12 letter that new laws may affect the unit’s mining rights and leases, Bougainville Copper said in a filing.
Talks are continuing with the Papua New Guinea and Bougainville governments to seek assurances that would allow the unit to progress “study programs that are required to further assess the viability of reopening the mine,” Bougainville Copper Chairman Peter Taylor said in an Aug. 14 filing.