Tensions ease at Harmony's PNG gold projects

PORT MORESBY, May 5 (Reuters) - Mine work was set to resume at two rich gold projects in impoverished Papua New Guinea after violent tensions eased between locals and landowners over jobs, one of the proposed partners in the mines said on Monday.

Unrest at the Hidden Valley and Wafi-Golpu sites, some 70 kilometres apart (45 miles) in the Highlands region had stabilised in recent days, said a spokesman for Newcrest Mining Ltd (NCM.AX), which is set to invest a half-billion dollars to help Harmony Gold Mining Ltd (HARJ.J) exploit the lodes in exchange for up to 50 percent ownership.

South Africa-based Harmony suspended development work at Hidden Valley, potentially one of the largest gold mines in the southern hemisphere, after 12 people were hurt in clashes last week, according to a local media report.

"These incidents are not expected to have any impact on project schedules," the Newcrest spokesman said.

Attacks on the Hidden Valley mine by a group seeking work forced workers already on the payroll to evacuate to a nearby town or flee into the jungle, Port Moresby's Post-Courier newspaper reported on Monday.

Harmony executives could not be immediately reached.

Hidden Valley is in its final construction stage and Wafi-Golpu is nearing the end of a mine study before construction starts in 2009.

Hidden Valley is scheduled to start next year and yield about 250,000 ounces of gold and 3.6 million ounces of silver each year for 14 years.

Operations at the Wafi-Golpu project were suspended last Friday over an employment dispute with landowners.

The tie-up, if approved by Newcrest, will mark the firm's first step into Papua New Guinea, a poverty-stricken island sitting across the Coral Sea from Australia, and will give it a share in some 15.2 million ounces of gold, 1.76 million tonnes of copper and 51 million ounces of silver that Harmony estimates the deposits hold.