Unexpected insurance sets project back

Duncan Wilson
Australian Solomons Gold (ASG) says its Gold Ridge project has been set back several months, as the company and its financiers face an “unexpected” extension to insurers’ assessment. When ISLANDS BUSINESS spoke with Australian Solomons Gold general manager, Keith Neilsen, in March, he appeared confident the Australian government’s Export Finance and Insurance Corporation (EFIC) would very soon approve political risk insurance for the Solomon Islands mine.

Now Neilsen says he’s disappointed that EFIC’s “independent review”Ńwhich the company “didn’t know about”Ńhas set back until September the decision on insurance. 

“We’re disappointed in the sense that it took us off guard. It knocked us back a bit. We’re wondering why that never came up in the first place,” he said.

In the following months, EFIC’s social and environmental reports will be independently reviewed, disclosed to the public and subject to a final review.

“All the equity and debt raising we have done so far, the problem there for us was the caveat over it of political risk insurance, so it all came back to securing that insurance,” Neilsen said.

Although this process took ASG by surprise, ISLANDS BUSINESS understands that senior EFIC staff suspect the mining company had inadvertently overlooked some of the requirements in their enthusiasm for the project.

Meanwhile, Neilsen has met with the Solomon Islands Cabinet, funders and landowners and the provincial government to explain the extension.

“The banks, the cabinet, Prime Minister, have all been very supportive, and as far as we’re all concerned, it’s still full steam ahead.”

Neilsen said that since the Sikua-led government took office last year, the prime minister’s enthusiasm and support for the project had reassured investors and insurers.

Sikua also discussed the Gold Ridge project with Australia’s Prime Minister Kevin Rudd when the two leaders met in March.

“This current government has taken the bull by the horn and they have had a direct instruction from the prime minister to the ministers, to make things happen. There is a momentum there that wasn’t there previously.”

Neilsen also confirmed to ISLANDS BUSINESS that ASG is expected to extend the life of the mine, pending exploration.

“The current (estimated) mine life is seven years. We think that’s conservative but we believe it is closer to 10.

“This is a mineral rich zone...we believe that we will probably find more gold out there to support the longevity of this project. Hopefully, we would like to see 20 yearsŃbut that’s on exploration,” Neilsen said.

Gold Ridge would initially employ between 600-800 Solomon Islands’ workers and tradesmen. Operationally, the workforce would number about 400.