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Papua New Guinea’s $200m back taxes claim rocks gold miner St Barbara

St Barbara boss Andrew Strelein has accused authorities in Papua New Guinea of errors in law after the gold miner was hit with a Christmas Eve tax bill of more than $200m.

The Papua New Guinea government has slugged gold miner St Barbara with a $200m-plus fine.
The Papua New Guinea government has slugged gold miner St Barbara with a $200m-plus fine.

St Barbara boss Andrew Strelein has accused authorities in Papua New Guinea of miscalculations and errors in law after the gold miner was hit with a Christmas Eve tax bill of more than $200m.

St Barbara is digging in for a fight with PNG over the bill, which carries with it the allegation the company engaged in fraud.

PNG authorities are seeking 523m kina ($206.8m) from St Barbara via tax claims which go back almost 20 years.

The claim rocked St Barbara on Tuesday with the stock plunging more than 34 per cent to 20c as more than $100m was stripped from the company’s market capitalisation.

The tax dispute comes with St Barbara in the process of having its Simberi mining lease renewed and just weeks after it signed a memorandum of understanding with the entity anointed by PNG to hold a share of mineral projects within the country.

The MOU is a step towards government-backed Kumul acquiring up to a 20 per cent stake in an unincorporated joint venture over the Simberi mining lease at an agreed market price.

PNG’s Internal Revenue Commission (IRC) dropped its tax ruling on St Barbara’s wholly-owned subsidiary Simberi Gold just before shutting up shop for the Christmas break. St Barbara vowed to appeal and to clear its name.

St Barbara said it was notified on Monday the IRC had delivered correspondence on tax assessments to Simberi Gold’s tax agent in PNG.

The IRC went all the way back to 2006 in claiming St Barbara owes 523m kina, inclusive of a 200 per cent penalty.

St Barbara mines gold in PNG. Picture: David Gray/AFP
St Barbara mines gold in PNG. Picture: David Gray/AFP

An amount of 435m kina relates to depreciation deductions and another 88m kina to St Barbara debt-for-equity recapitalisation of Simberi Gold in 2018.

In a statement to shareholders, St Barbara said the IRC had gone well beyond the statutory limitation period of five years for amended tax assessments, and to justify its actions had accused Simberi Gold of being fraudulent in the preparation of tax returns.

“St Barbara takes this assertion very seriously and will vigorously defend it,” the company said.

“Simberi Gold has utilised reputable tax advisors within PNG throughout the relevant periods, has made full and true disclosures of all material facts and strongly rejects any suggestion of dishonest conduct of any nature whatsoever.

“St Barbara believes that the assertions of fraud have been made to inappropriately re-open prior year tax returns.”

Mr Strelein said it was disappointing to receive the amended assessments just as the IRC was closing down its office for Christmas, particularly when “positive progress” has been made with PNG’s Mineral Resources Authority and with Kumul on a mine development project known as Simberi Sulphides.

“Nonetheless, we hope that with discussion and realisation of the miscalculations on top of the erroneous applications of the law in the IRC amended assessments, we can resolve this matter quickly,” he said.

Mr Strelein said Simberi Gold would prepare an appeal which had to be lodged by February 17.

St Barbara last month rattled the tin for $110m for boosting Simberi production to 230,000 ounces by 2034. The mine is forecast to produce 65,000-70,000 ounces in 2024-25.

Brad Thompson
Brad ThompsonMining reporter

Brad Thompson is The Australian’s mining reporter, covering all aspects of the resources industry and based in Perth.

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Original URL: https://www.theaustralian.com.au/business/mining-energy/papua-new-guineas-200m-back-taxes-claim-rocks-gold-miner-st-barbara/news-story/a8781831686832e75b04afa72edd4659