ESDD - Gosowong - 29 August

DRAFT
MEMORANDUM
TO: JAMES CHAMPION DE CRESPIGNY
FROM:
SUBJECT: GOSOWONG MINE - ENVIRONMENTAL AND SOCIAL ASPECTS
DATE: 29 AUGUST 2019
Roscoe Postle Associates UK Ltd. (RPA) was retained by PT Pradana Petrindo Persada
(Pradana) for the completion of a high-level due diligence review on the Gosowong Gold Mine
(Gosowong or the Mine), located in the Republic of Indonesia. The Mine is owned and
operated by PT Nusa Halmahera Minerals (PT NHM), an incorporated joint venture between
Newcrest Singapore Holdings Pte Ltd (75%), a wholly owned subsidiary in the Newcrest
Mining Group (Newcrest), and PT Aneka Tambang (25%).
The findings of RPA’s technical due diligence review are reported in a due Diligence report
(the Report), dated 26 July 2019. Due to time constraints, the Report excluded the detailed
review of the Environmental and Social aspects related to the Gosowong operations.
This memo provides the presents the findings of the due diligence review of the E & S aspects
of the Gosowong mining and processing operations. The review was carried out on behalf of
RPA by SLR Consulting Ltd. (SLR).
FINDINGS AND OBSERVATIONS

SLR was requested to provide environmental and social due diligence of the Gosowong Mine,
to identify gaps against in-country standards and international norms including IFC
Performance Standards.
Information was obtained through a dataroom review and review of publicly available
documents. The following sections provide a summary of the key findings obtained.
INFORMATION REVIEWED
Environmental and social related information and reports/documents were reviewed by SLR
from the following links: https://rpa-fileshare.exavault.com/share/view/1junq-d77jyntj and
https://auth.au.ansarada.com and through question lists issued to the Company.
LIMITATIONS
A site visit was not undertaken. Information was limited to the availability of documents in the
dataroom and answers provided by the Company to SLR data gaps.
RPA One Fetter Lane Suite 509 | London, UK EC4A 1BR | T +44(0) 203 950 4875 www.rpacan.com
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DRAFT
KEY REGULATORY PERMITS

Key environmental permits held for the Site include:
Statutory Approvals
An environmental impact assessment (EIA) has been obtained and against which
findings performance is reported. Findings are reported to and discussed with national
and local agencies. AMDAL for Gosowong (1998), Toguraci (2003), Kencana (2006),
Expansion of production to 800TKPA (2010).
Approved AMDAL 2019 permit (EIA permit) valid until change of operations.
Secondary licenses (e.g. water discharge) have been obtained as required.
Approvals are in place for the Gosowong Cutback, Kencana Underground, Toguraci
Underground and TSFs. It appears that minor deviations from plan may need to be
approved in some instances, however, these are considered minor amendments.
UKL/UPL (monitoring programs that sit alongside AMDAL) for exploration activities
are in place
Forestry permits for disturbance of state-owned forest areas have been obtained
(Ministry of Environment and Forestry) as required, with appropriate compensation
paid.
There are several options available for future tailings storage, which includes the
utilization of the Toguraci Pit with and without engineered walls, a new engineered
TSF at Kobok, or the expansion of the existing TSF facility.
Gosowong mine and supply chain is certified as fully compliant with the International
Cyanide Management (ICM) Code, September 2011
Notes:
1. The AMDAL is a study of the potential significant impact of the proposed business activity on
the environment, while the UKL-UPL covers monitoring and management efforts undertaken
for business activities which are not likely to have significant impact on the environment.
No material issues have been identified pertaining to environmental permits and all permits
are indicated to be in place. However, Newcrest advise that the Regulators have recently
conducted a compliance audit on the permits and will publish the results when they become
available.
SLR concludes that the Gosowong mine project is currently in line with national legislative
requirements and currently in possession of relevant licences, permits and approvals or in the
process of obtaining such for the future project work.
ENVIRONMENTAL AND SOCIAL REVIEW
A summary of the environmental and social status of Gosowong mine is compared against
international norms and best practice is provided in the following table. Particular reference
is made to the IFC Performance Standards, which although non-binding guidance, represent
best international environmental and social management practice for the mining sector.
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DRAFT
Summary of
Project Status
Topic Observation / Gap Analysis Questions and
Recommendations to Address
Gaps Identified
Environmental, Gosowong is owned and operated by PT
Social and Nusa Halmahera Minerals (PTNHM), an
Health and Indonesian company owned by Newcrest
Safety (75%) and PT Aneka Tambang (25%).
Management
Systems and PTNHM has environmental, social and
Policies. health and safety management systems
and policies in place to manage any
potential impacts of its activities on the
environment.
There are policies in place which cover the

following:
• Anti corruption/bribery policy

• Communities policy
• Human rights policy
• Social performance standard
• Indonesian Government regs –
o MEMR 26/MEM/2018
o MEMR – 1824K/30/MEM/2018
In September 2011, the Gosowong mine
and supply chain was certified as fully
compliant with the International Cyanide
Management Code.
Contractors operate under PTNHM’s own

environmental and health and safety
management systems.
Environmental Organizational Structure

and Social
Management Gosowong is supported by onsite and
offsite functions with PTNHM offices in
Manado (support functions including
finance, supply and logistics) and in Jakarta
(support functions including government
relations and permitting).
In addition to core production, mining and

processing, the following support functions
exist at the operation:
• Technical services (including mine

planning, drill blast, geotechnical,
ventilation, and survey)
• Geology (exploration and resource
geology)
• KTT (safety and compliance)
• Commercial (including supply and
logistics, IT and communications,
flights and accommodation)
• Finance
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Summary of
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Gaps Identified
• Maintenance and asset
management
• Performance (business
improvement)
• Human Resources (including
training, internal and external
communications)
• Health and safety (including
emergency response team)
• Social performance (including
sustainability, social license, local
permitting and stakeholder
relations)
• Environment
• Security
• Mine closure planning
There are dedicated managers for
environmental, social and health and safety
(ESHS) including: Augy Wilangkara and
Adiratma Endro (Health, Safety and
Environment), and Usman Slamet (Social
Performance).
There is a clear ESHS reporting structure.

The management presentation indicates
that ESHS representatives are experienced
and knowledgeable in their fields.
Environmental The following ESIA have been produced for No issues are currently identified
and Social the Project: AMDAL for Gosowong (1998); relating to environmental
Permits and Toguraci (2003); Kencana (2006); and permits. Newcrest advise that
Licences Expansion of production to 800TKPA the Regulators have just
(2010). conducted a compliance audit
on the permits and will publish
An AMDAL 2019 permit (EIA permit) has the results when available. It is
been approved and is valid until there is a recommended that the results of
change of operations. Performance is this compliance audit are
reported to and discussed with national and obtained to confirm the
local agencies. compliance status of all existing
Secondary licenses (e.g. water discharge) environmental permits.
are obtained as required.
Approvals are in place for the Gosowong

Cutback, Kencana Underground, Toguraci
Underground and TSFs, although minor
changes may need to be approved in some
instances these are considered minor,
amendments.
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Summary of
Project Status
Gaps Identified
UKL/UPL (monitoring programs that sit
alongside AMDAL) for exploration activities
are in place.
Forestry permits for disturbance of state-

owned forest areas are obtained as
required, with appropriate compensation
paid. All of these options require a
new AMDAL permit
There are several options available for
future tailings storage: utilization of the
Toguraci Pit with and without engineered
walls, a new engineered TSF at Kobok, or
the expansion of the existing TSF facility.
Gosowong mine and supply chain is

certified as fully compliant with the
International Cyanide Management (ICM)
Code.
Site management advise that there are no

exceedances against environmental
permits/licences concerning all
environmental monitoring (air emissions,
noise, groundwater and surface water)
requirements in the last 3 years.
There has been no previous claims /

prosecutions / fines or warnings concerning
environmental permits.
AMD Acid Mine Drainage (AMD) is a key risk for Continued monitoring of
the site to be managed during operations groundwater/surfacewater
and at closure including waste rock dumps associated with AMD risk areas
and Tailings Storage Facility Areas. to ensure on going containment
Consequently, there is the potential for of AMD. Implementation of an
AMD to impact the surrounding environment action response plan in the
without adequate controls in place. It is event of a breach or
evident that Site Management are looking at containment failure enabling
ways of managing AMD. Positive steps AMD to impact groundwater/
being taken by the Company to address surface water.
AMD includes the following:
• The majority of waste rock material on

site is Potentially Acid Forming (PAF)
and there is an AMD study currently
underway to develop a geochemical
model to design active and/or passive
treatment methods to manage
potential impacts on the environment
that would complement existing water
quality monitoring and passive
treatment.
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DRAFT
Summary of
Project Status
Gaps Identified
• There is non-acid forming (NAF) mine
waste present to allow encapsulation
of PAF material over the life of the
operation. Some mine waste primarily
from open pit operations is potentially
acid forming but is slow-lag in nature,
thus providing potential for
encapsulation with inert waste.
• Site specific geochemical tests have
been developed for Gosowong,
allowing mine waste to be
characterized in advance of its
extraction.
• Rehabilitation carried out more than
six years ago included waste
stockpiles with PAF waste that was
encapsulated with NAF material and
proven to be stable against erosion.
• AMD indicators are analysed for as
part of the monitoring program both
surface and groundwater. Site
management advise that there are no
exceedances against the
environmental permit/licence
concerning groundwater and surface
water monitoring of AMD in the last 3
years.
Cyanide The use of cyanide at the Site conforms
Management with the International Cyanide Management
Institute against which the Site is certified.
There are third party audits against the
code every 3 years. The Gosowong Mine
was certified in Substantial Compliance on
April 16, 2019 and the Corrective Action
Plan has been posted on the Cyanide Code
web site.
There is a Cyanide Management Plan for

the Site detailing a description of the
proposed operation, safety considerations
and Cyanide management.
An Emergency Response Procedure has

been developed for the site covering
cyanide use.
Surface water The primary source of water for Gosowong

Management is the Tabobo River. There are two water
lines running from the Tabobo river, one for
line raw water used in operations and the
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Summary of
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Gaps Identified
other for treated water used in the camp
and administration facilities.
Water for use in operations is pumped from

the Tabobo River and is distributed directly
to the processing plant, mines, mobile fleet
workshops, batching and paste plants via
holding tanks.
Water to be used in the camp and

administration facilities is pumped from the
Tabobo River. Water used within the camp
and administration facility is treated but is
not potable.
Approximately 2% of the river baseflow is

abstracted. The available information states
that there is no evidence for any significant
impacts to river ecosystems based on
evidence from previous hydrological and
biodiversity assessments.
The available information confirms that

biological and physiochemical monitoring of
the Tabobo, both upstream and
downstream of the operation, continues to
show no significant impacts. Site
management advise that all groundwater
monitoring is reported to be within
permit/licence conditions over the last 3
years.
Groundwater Toguraci - hot ground water encountered at

Management Toguraci is managed via a series of
boreholes fitted with submersible pumps to
lower the water table ahead of planned
mining. The submersible pumps deliver the
water back to two main UG pump stations
that then pump this water out of the mine to
surface water cooling and settling ponds.
Kencana is a perched aquifer that is

dewatered by bleed off pumping.
Approximately 10% of water used onsite

comes from groundwater through three
bores located to service specific locations.
Site management advise that all

groundwater monitoring is reported to be
within permit/licence conditions over the last
3 years.
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Summary of
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Waste Water Excess water from the TSF is treated prior
Management to release into the Kobok River. Limits are
imposed on the Site to not exceed 0.1 mg/L
concentration of Free Cyanide. Ecological
and physicochemical monitoring of the
Kobok is carried out.
Site management advise that all surface

water monitoring is reported to be within
permit/licence conditions over the last 3
years.
Biodiversity Site management advise that there are no

protected areas within the approved mine
footprint nor critical habitat designations.
The available information indicates that

surrounding areas are mainly zoned as
either protected or production forests. Site
management advise that there are no
protected areas within the approved mine
footprint. The available information confirms
that there are IUCN critical, vulnerable and
rare species of flora and fauna in the
Project Area of Influence (PAOI).
There is a biodiversity management plan

that site follow as well as the biodiversity
commitments within the ANDALS and
RKLs.
An ecosystem services assessment was

included within the Site EIA and includes
stakeholder engagement.
Legacy Issues There are no legacy issues associated with

the Site as the Site has operated from a
greenfield location.
Traffic Safety The mine is accessed by unsealed road Confirmation whether the site
Management connecting to the Trans Halmahera has developed and implemented
Highway. There are a number of informal a Traffic Management Plan
settlements in the area, including a focused on avoiding any
settlement that has developed along the potential impacts to local
Trans Halmahera Highway near the main communities and the
entrance to the mine. environment and ensure that all
drivers are fully trained on traffic
Gosowong is serviced by a barge port management procedures.
facility called the Barnabas Port, located on
Kao Bay approximately 10 km from site.
Ore from Kencana is trucked approximately

3 km to the processing plant.
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Summary of
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Gaps Identified
Ore from the Touguraci Mine is trucked
approximately 5 km to the processing plant.
There is no evidence of a traffic

management plan implemented for the
Site.
Cultural Cultural heritage has been identified

Heritage through the company’s engagement and
consultation with the four local indigenous
tribes (Modole, Pagu, Kao, Boeng peoples).
Cultural heritage is therefore promoted
through MOUs with each of the tribes to
fund the development and celebration of
tangible and intangible cultural values.
Mine Closure Closure and rehabilitation plans have been The overall closure objective
reviewed and refined since 2004 based on should be to leave the mine (and
conceptual closure plans that identify the associated infrastructure) area
types of treatment required for different in a condition that minimises
areas. adverse impacts on the social
and natural environment and
AMD and waste stockpile areas are with a legacy that makes a
identified as a key risk for the site to be positive contribution to
managed during operations and at closure. sustainable development.
Gosowong reports that it has conducted
successful rehabilitation of waste rock The site should be monitored
dumps in the past that has led to the and maintained during post-
reduction of reclamation bonds. The closure in order to demonstrate
effectiveness of encapsulation is evidenced that the designs meet these
in rehabilitation carried out more than six conditions and is in compliance
years ago wherein PAF waste has been with national mine closure
encapsulated with NAF material and proven obligations.
to be stable against erosion.
Mine closure requirements and
AMD indicators are analysed for as part of the related cost estimates
the monitoring program both surface and should be reviewed on an
groundwater. Site management advise that annual basis and the closure
there are no exceedances against the funding arrangements adjusted
environmental permit/licence concerning to reflect any changes.
groundwater and surface water monitoring
of AMD in the last 3 years. It is recommended to have an
independent review and
The current discounted financial closure verification of closure provisions.
provision for Gosowong is $31.6 million (as
at 30 June 2018). Note that under financial
reporting accounting rules this figure
excludes some additional closure costs
such as employee redundancy and
termination entitlements. The management
presentation states that $14M has been
allocated against mine closure. Site
Management advise that the $31.6M is the
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Summary of
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Gaps Identified
closure provision for what is reported
against the accounting standards. This is
what gets legally reported to the ASX and
independently audited against. The $14M is
for the post-closure bond and calculated as
per regulator requirements.
Community engagement has been actioned

during mine closure planning in
conformance with the Newcrest
Environmental Standards Document. This
was part of a 3-month process whereby the
Company sought feedback from the
community regarding the development of
the company’s 5-year Community
Development & Empowerment (CDE) Plan
and mine closure proposals. Feedback from
this process included ideas for development
post-closure.
Environmental There is an environmental and social

Monitoring management/monitoring plan in operation
Compliance for the site.
The following routine environmental

monitoring is stated for the mine:
• Biological and physiochemical

monitoring of the River Tabobo,
both upstream and downstream of
the operation;
• Daily and monthly monitoring of 8
discharge points; and
• Quarterly gw monitoring in
accordance with TSF discharge
permit
Grievances concerning air emissions are
reported and managed.
Occupational exposure monitoring

highlights an employee, Bongga Karaeng,
having 168% OEL diesel particulate matter
(12/01/2017). Site management advise that
this exceedance was based on an internal
Newcrest Standard as there are no
Indonesian standards for diesel particulate
matter OEL's.
Emissions monitoring equipment for the

diesel fleet has been ordered and is
currently being calibrated prior to sending to
site. In addition there has been a committee
established at site to help manage exposure
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Summary of
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Gaps Identified
limits, with a management plan created and
in the process of being implemented. Health
surveillances are being completed which
includes a respiratory questionnaire,
spirometry and chest x-rays.
There are no records of any additional

exceedances.
Site management advised that there are no

reported exceedances against the
environmental permits/licences concerning
all environmental monitoring (air emissions,
noise, groundwater and surface water) in
the last 3 years.
Copies of Management plans for the Site

that have been provided include:
• Cyanide Management Plan

• Closure Plan
Tailings/Waste The Gosowong Tailings Storage Facilities
Management (TSF) consist of TSF 1 and TSF Western
Extension (WEX).
TSF 1 was constructed in four stages, from

1999 to 2013.
TSF WEX was designed by Coffey in 2015,

constructed in 2016/2017 and has been
used for tailings disposal and storage since
it was commissioned in 2017. A further 5 m
upstream lift has been designed by Golder
in September 2018 and is scheduled for
completion in FY19. This lift will satisfy
requirements for the current life of mine.
Additional Storage Capacity
Preliminary studies have been undertaken

to identify additional storage capacity
should it be required. The lowest cost option
is to utilize the Toguraci Open Pit. An initial
4.5 Mt of tailings can be placed in the pit
without requirement for embankment
construction. A further 4.0 Mt of capacity
can be added with the construction of a
55,000 m3 embankment.
Design and management of the Gosowong

TSF is based on industry guidelines.
Inspection and monitoring programs are in
place and are undertaken according to
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Summary of
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Gaps Identified
industry guidelines by internal and external
independent parties
Decant water is pumped to the TSF

polishing ponds which are sized to provide
a nominal 36 hours retention. The TSF
polishing ponds are HDPE lined and located
to the north of the TSF 1, adjacent to
existing sediment ponds receiving the
Kencana waste dump runoff and
underground dewatering flows.
Labour The Gosowong includes an extensive range

Practices of site support functions and facilities that
would be considered best in class for a high
grade, Indonesian mining operation. These
support functions are located onsite and in
offices in Manado and Jakarta. As of 31st
August 2018, there are
• 972 PT NHM full time equivalent

employees (FTE)
• 1,131 contractors
An organisational review led by Mawson
Consulting in 2016 recommended a
significant reduction in the work force,
indicating that the site would be more
effectively operated with a total of 744 FTE.
A review of the available data indicates that

there are a number of cost saving initiatives
involving a planned reduction of 140 fulltime
equivalent employees (FTE) in FY19, which
is currently being implemented by the site
management team. Site management has
confirmed to SLR that there is no current
planned redundancy for Gosowong.
In terms of redundancies on mine closure, a

formal communication to the communities
regarding post-mining impact was carried
out in 2014. This is part of the RPT
(Indonesia government post mining plan)
requirement.
Extensive functional advisory support

(ranging from operational and technical to
legal and marketing) is also provided by
Newcrest based out of Melbourne, Manado
and Jakarta.
The Gosowong Indonesian workforce are

covered by Collective Labour Agreement
(CLA). The current CLA commenced in July
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Summary of
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2018 and will operate for two years through
to 2020
Of the Indonesian employee workforce:
• Local Employees 550
• National Employees 406
• Expatriates 16
PT NHM Employees by Gender
• Female Employees 81 8.3%
• Male Employees 891 91.7%
Social Tenure
Management
The available information indicates that
Tenure over all Gosowong deposits is
covered by a 6th generation Contract of
Work (CoW) No.B.143/PRES/3/1997. The
current COW activity area is set forth in the
decree of the Minister of Energy and
Mineral Resources
No.271.K/34.02/DJB/2007, dated 2 May
2007.
PT NHM leases the land on which it

operates by fulfilling mandatory Indonesian
regulatory requirements by obtaining
relevant permits such as a Borrow-To-use
permit for forestry areas and land-clearing
permits all of which have conditions
pertaining to the payment of compensation
to land-owners for any affected commercial
crops, gardens and other community
assets. Historically there has been and
there is no planned resettlement of peoples
and therefore no specific livelihood
restoration plan or Resettlement Action Plan
for displaced persons.
Baseline
The population of North Halmahera in 2017

was 196,279 distributed into 17 sub-
districts. Most people engage in small scale
farming and fishing and have a modest
economic life style. On average, each
farmer in the Kao District owns two hectares
of land for agricultural usage with the
agriculture sector producing coconuts,
coffee, rice and other crops. Aquaculture
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sector produce includes prawns and fish
such as puffer fish, grouper, snapper, tuna
and Spanish mackerel (PT NHM, 2008).
The available information indicates that the
nearest village to Gosowong is located
approximately 10 km east of the mine.
Social aspects were completed as part of

the ESIA's that have been done for each
project.
The main economic activity of local people

is subsistence farming and fishing. There
are 2 informal settlements in the area
(Dusun Beringin in the North and Dusun
Kobok in the South), including a settlement
that has developed along the Trans
Halmahera Highway near the main entrance
to the mine. Most of the residents consist of
traditional gold miners and their families.
They are included in NHM’s broader
engagement with communities in its mining
ring area.
Social Management
The Company has Representatives for

community relations, grievances, donations,
government relations, sustainable
development, finance and administration.
From the Company presentation the

following social policies are held by the
Company:
• Anti corruption/bribery policy
• Communities policy
• Human rights policy
• Social performance standard
Indigenous people are recognised as living

in the PAOI. Free Prior and Informed
Consent (FPIC) is a process for applying
engagement and consultation processes
ensuring participation of indigenous
communities. NHM adopts the Newcrest
Social Performance Standard which
stipulates requirements to apply IFC
principles including the FPIC process as
part of its engagement with vulnerable
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groups/peoples including local indigenous
groups.
Site management advise that there is a

broad stakeholder register and an annual
plan for stakeholder engagement.
A social media search carried out by SLR

indicates that in 2004 over two thousand
local indigenous people occupied and
halted work at Newcrest Mining's new
Toguraci mine site in North Maluku,
Indonesia, demanding compensation and a
share in benefits from Newcrest's previous
gold mining since 1999. The protestors
include women, children and the vast
majority were local people and members of
local tribes of Pagu, Madole, Boing and
Towiliko Kao. Several dozen protesters
claimed ancestral land rights over the area.
Newcrest was forced to shut down the mine

for five weeks and eventually the protesters
were cleared from the site by Indonesia's
Brimob paramilitary police unit, employed
by Newcrest.
The police shot two people dead after

around 150 protesters returned to reoccupy
the site. Others were reported missing.
Other allegations against Newcrest from the

protestors include reports that Newcrest
was opening its new Toguraci mine in
protected forest areas allegedly without
proper government approval.
Newcrest has since addressed security

issues at the Site through implementation of
a Policy/Procedure on IFC PS 4, with detail
on the security arrangements and act of
security personnel. No other security related
issues have been since reported.
Grievances The Company indicates that it has an

appointed representative for community
relations and grievances.
The Newcrest Gosowong website mentions

a Code of Conduct for the way they do
business. It covers a wide variety of topics
that fall into four main areas: How We
Engage With Each Other At Work, How We
Engage With Our Communities, How We
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Do Business and How We Use Newcrest
Resources.
The website offers the opportunity to report

any misconduct, any safety issues, or any
breach of our Code of Conduct.
Grievances can be conveyed by community

stakeholders (including anonymously)
through the placement of letters in
grievance boxes, or by phone or email.
Community Newcrest state that community relations are

Development responsibly managed through a community
development program that focuses on
social capital, social cohesion, community
wellbeing and improved health.
PT NHM currently has a five-year Corporate

Social Responsibility (CSR) program (FY19
to FY23) termed the Community
Development and Empowerment (CDE)
Master Plan that covers Gosowong
production and postproduction stages of
operation. The allocation of funds goes to
long term development projects that have a
focus on education, health and economic
development activities. The Program
supports projects that focus on critical
health and education infrastructure
including the upgrading of community health
facilities and the building and modernisation
of primary and secondary schools. The
Program also supports several sustainable
livelihood projects such as agribusiness
training for local farmers and micro PT NHM
and honorarium to teachers surrounding
priority villages. Starting in FY19, the
education program has implemented full
scholarships for awarded students and
teacher capacity building. The program also
provides assistance to support the cultural
activities and preservation of local
indigenous groups.
Since 1997, PT NHM has voluntarily
contributed 1% of its estimated gross
revenue each year to fund its CSR
Program. In FY2017 and FY2018 this
amounted to $3.5 million and $3.3 million
respectively. This fund is applied to
community development initiatives across
five subdistricts and 83 villages surrounding
the mine development area, with a total
impacted population of some 50,000
persons. Funds are apportioned based on a
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ring system of directly affected, less
affected and indirectly affected villages.
This is compliant with the Ministry of Energy
and Minerals Resources (MEMR)
requirements (KEPMEN ESDM
1824/30K/MEM/2018) regarding Community
Development and Empowerment Guidance.
There is no regulatory requirement that
stipulates the specific contribution amount
of mining companies except for Indonesian
State Owned Enterprises (SOEs). For
SOEs there are regulatory requirements
(PER_09/MBU/07/2015) which limit the
company to allocate up to a maximum 4%
of annual net profit to community and
environmental development.
Relocation/Rese The Company states that historically there
ttlement/ Land has been and there is no planned
Acquisition resettlement of people and therefore there
is no specific livelihood restoration plan or
Resettlement Action Plan for displaced
persons.
Health & Safety Gosowong state an excellent safety record

and compliance to all legislated
requirements regarding the health and
safety of workers and surrounding
communities. In 2015, Gosowong
commenced the implementation of a three
pillar safety transformation program driven
by Newcrest at a group level. The program
has focused on behavioural safety, critical
control management and process safety.
The mine is deemed to be a National Vital
Object (NVO) in Indonesia and Newcrest
have a Memorandum of understanding in
place with provincial police forces, enabling
them to provide support and protection of
the NVO.
Artisinal mining occurs in the vicinity of

Gosowong (termed illegal by Newcrest) but
does not impact mining operations.
Newcrest state that artisanal mining is
controlled via a security program involving a
combination of PT NHM security, contract
security, Brimob (a paramilitary mobile
brigade of the Indonesian National Police),
and local police.
The main NGOs in Indonesia, WALHI and

Friends of the Earth, have a local branch in
nearby North Sulawesi and has
occasionally raised concerns in local media
17
DRAFT
Summary of
Project Status
Gaps Identified
relating to alleged impacts of the mine on
the environment.
Gosowong has a formal Health and Safety

management system that is overseen by
the Kepala Teknik Tambang (KTT, a
statutory role) that meets the requirements
of the current Indonesian Mining safety
legislation. In FY18 Gosowong recorded at
Total Reportable Injury Frequency Rate
(TRIFR) of 1.05 per million hours worked an
improvement of 50% on the FY17 results.
This was achieved by the application of a
Safety Cultural change program (NewSafe)
and a Critical Control Management
program.
A fully equipped on site clinic is operated by

International SOS providing non work and
work-related injury and illness management.
A full health hygiene baseline has been
conducted and plans are in place to reduce
the worker exposures where required.
A comprehensive malaria elimination
program is in place. The medical clinic has
malaria management capability.
Emergency Response
Gosowong has a full time, fully equipped

Emergency Response Team (ERT)
available 24 hours per day, 7 days per
week. The fulltime members are trained in
surface and underground fire rescue,
aviation rescue, confined space and
working at heights rescue with first aid
awareness to support the International SOS
hospital staff. The full time ERT is
supported by trained volunteers sourced
from the permanent workforce.
The Company has confirmed that

Gosowong has implemented the
Policy/Procedure on IFC PS 4, with the
following detail on the security
arrangements and act of security personnel:
• Newcrest Security Standards apply for
PT NHM.
• Newcrest is a member of the Voluntary
Principles on Security and Human
Rights (VPSHR) and has a developed a
Security and Human Rights Standard, to
ensure that the implementation and
delivery of security support, that can
18
DRAFT
Summary of
Project Status
Gaps Identified
involve private and public security, is
consistent with the VPSHR. Together
with the Newcrest Security Operations
Standard, the Security standards
account for the principles of
proportionality and good international
practices in relation to hiring, rules of
conduct, training, equipping, and
monitoring of such workers, and by
applicable law, in particular:
• Risk Assessments. All security
requirements are based on a risk
assessment that includes the impact of
security on and by internal issues and
the local communities.
• Use of Force. Newcrest security
operations shall adopt rules for the use
of force consistent with the applicable
laws and regulations of the country
where the operation and/or project is
located. Use of force shall be governed
by the following principles:
• Newcrest security operations
undertaken by employees and/or
contractors shall not use of firearms.
• All security personnel shall take all
reasonable steps to avoid the use of
force.
• If force is used, it shall be in a manner
consistent with the applicable laws.
• In no case, shall the use of force exceed
what is strictly necessary, and should be
proportionate to the threat and
appropriate to the situation.
• Where specialist security equipment
exist, appropriate training shall be
provided to all personnel using the
equipment.
• Training shall be provided by a certified
qualified instructor.
• If security personnel are formally
authorised to assist in the exercise of a
state’s law enforcement authority, such
as reserve police, the use of force or
weapons shall comply with all national
and international obligations applicable
to the regular law enforcement officials
of that state.
• Selection of security personnel.
Newcrest requires that all security
employees and contractors shall:
19
DRAFT
Summary of
Project Status
Gaps Identified
o Be a minimum of 18 years of age.
o Be a citizen of the country of
operation or have the relevant work
visas/permits.
o Have the appropriate education
required to properly comprehend
any verbal and written instructions
given, and be able to effectively
communicate back to their
immediate supervisor. Have not
been convicted or plead guilty to
any felony or job related crime.
Crimes may include, but not be
limited to:
▪ Murder;
▪ Manslaughter;
▪ Human rights related offence,
includes sexual assault;
▪ Assault with intent;
▪ Criminal theft and/or fraud;
▪ Gross misconduct; and
▪ Alcohol and/or drug-related
convictions.
▪ Provide a confirmatory police and
criminal history check. For
international operations, local
requirements will determine
whether or not a criminal history
check needs to be sourced from
either a local authority or an
employee’s home location/country.
▪ Security Code of Conduct.
Newcrest has a Security Code of
Conduct that details the minimum
ethical and lawful behaviour that is
required by company and contract
security employees. Compulsory
online training or formal training
sessions are provided for the Code.
All persons are required to
acknowledge completion of the
training and provide a signed
attestation that they have not
previously been involved in a
human rights abuse issue – this can
be used as grounds for immediate
dismal if found to be false. For PT
NHM the training is provided in both
English and Bahasa and covers:
▪ General Behaviour and Escalation
▪ Respect for Human Rights
20
DRAFT
Summary of
Project Status
Gaps Identified
▪ Respect for the Law
▪ Use of Force
▪ Apprehending and Detaining
Persons
▪ Care of Persons Injured and/or
Temporarily Apprehended
▪ Inhumane Treatment or
Punishment
▪ Sexual Exploitation and Abuse or
Gender-Based Violence
▪ Corruption
▪ Grievance. Social Performance
have Grievance mechanisms within
the communities that independently
monitor security related issues.
No human rights violations have been
reported since implementation of the
security arrangements Policy/Procedure on
IFC PS 4.
CONCLUSIONS
SLR has reviewed the Gosowong mining project concerning national compliance with permits
and licences and against international norms/ standards (Applicable Standards).
Based on the review, it is recognised that Gosowong has an organisational structure and
teams across environmental, social and health and safety (ESHS).
The Company has management systems in place covering environmental and health and
safety.
There is a certified management system conforming to the requirements of the International
Cyanide Management Institute.
The mine is indicated to be managed in line with national legislative requirements and impacts
of the mine have previously been assessed through a series of Project EIAs.
As part of the agreed scope for the project SLR has compared the project against the Equator
Principles (EP III) and IFC performance standards. Various gaps are highlighted in the
information obtained. In particular:
▪ It is not clear whether the site has a social management system or the details of this
system, if implemented.
▪ Confirmation is needed whether the site has developed and implemented a Traffic
Management Plan focused on avoiding any potential impacts to local communities and
the environment and ensure that all drivers are fully trained on traffic management
procedures.
▪ Continued monitoring of groundwater/surfacewater associated with AMD risk areas to
ensure on going containment of AMD. Development and implementation of an action
response plan in the event of a breach or containment failure enabling AMD to impact
groundwater/ surface water.
21
DRAFT
Recommendations are made for mine closure including the following:

▪The overall closure objective should be to leave the mine (and associated
infrastructure) area in a condition that minimises adverse impacts on the social and
natural environment and with a legacy that makes a positive contribution to sustainable
development.
▪ The site should be monitored and maintained during post-closure in order to
demonstrate that the designs meet these conditions and is in compliance with national
mine closure obligations.
▪ Mine closure requirements and the related cost estimates should be reviewed on an
annual basis and the closure funding arrangements adjusted to reflect any changes. It
is recommended to have an independent review and verification of closure provisions.
No issues are currently identified relating to environmental permits. Newcrest advise that the
Regulators have just conducted a compliance audit on the permits and will publish the results
when available. It is recommended that the results of this compliance audit are obtained to
confirm the compliance status of all existing environmental permits.
There are several options being considered for tailings storage. The planned option will require
a new AMDAL permit
It is the Company’s intention to ensure that environmental quality and social receptors are
appropriately managed throughout the project.
No Red Flags in relation to Environment and Social topics have been identified during this
review.
22
DRAFT
DISCLAIMER
This memorandum has been prepared by RPA for PT Pradana Petrindo Persada (Pradana or
the “Client”) at the request of Cutfield and Co. Any use of this report is subject to the agreed
terms, conditions and limitations (the “Terms of Business”) contained in the RPA proposal
accepted by the Client 5 April, 2019, which Terms of Business are incorporated into this
Disclaimer by reference. The memorandum may only be used by the Client in connection with
its review of the Gosowong Operation and shall not be used or relied upon for any other
purpose or by any other party, without the written consent of RPA. RPA accepts no
responsibility for damages, if any, suffered by any third party as a result of reliance on,
decisions made or actions taken based on this report. If RPA specifically consents in writing
to the use of and reliance on this memorandum by any party other than the Client, such use
and reliance shall be in all respects subject to the Terms of Business, including the limitations
of liability set forth therein. In no event will RPA have aggregate liability to the Client or any
third parties in excess of the limitations set forth in the Terms of Business.
The information, conclusions, opinions, and estimates contained herein are based on:
1. information available to RPA at the time of preparation of this memorandum,
2. assumptions, conditions, and qualifications as set forth in this memorandum, and
3. data, reports, and opinions supplied by the Client and other third party sources.
RPA has relied on the Client for guidance on applicable taxes, royalties, and other government
levies or interests, applicable to revenue or income.
While it is believed that the information contained herein is reliable under the conditions and
subject to the limitations set forth herein, this memorandum is based in part on information not
within the control of RPA and RPA does not guarantee the validity or accuracy of conclusions
or recommendations based upon that information. While RPA has taken all reasonable care
in producing this memorandum, it may still contain inaccuracies, omissions, or typographical
errors.
The memorandum is intended to be read as a whole, and sections should not be read or relied
upon out of context.
The information contained in this memorandum may not be modified or reproduced in any
form, electronic or otherwise except for the Client’s own use unless the Client has obtained
RPA’s express permission.
23

ESDD - Gosowong - 29 August

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DRAFT

FINDINGS AND OBSERVATIONS

KEY REGULATORY PERMITS

ENVIRONMENTAL AND SOCIAL REVIEW

There are policies in place which cover the

• Anti corruption/bribery policy

Contractors operate under PTNHM’s own

Environmental Organizational Structure

In addition to core production, mining and

• Technical services (including mine

There is a clear ESHS reporting structure.

Approvals are in place for the Gosowong

Forestry permits for disturbance of state-

Gosowong mine and supply chain is

Site management advise that there are no

There has been no previous claims /

• The majority of waste rock material on

There is a Cyanide Management Plan for

An Emergency Response Procedure has

Surface water The primary source of water for Gosowong

Water for use in operations is pumped from

Water to be used in the camp and

Approximately 2% of the river baseflow is

The available information confirms that

Groundwater Toguraci - hot ground water encountered at

Kencana is a perched aquifer that is

Approximately 10% of water used onsite

Site management advise that all

Site management advise that all surface

Biodiversity Site management advise that there are no

The available information indicates that

There is a biodiversity management plan

An ecosystem services assessment was

Legacy Issues There are no legacy issues associated with

Ore from Kencana is trucked approximately

There is no evidence of a traffic

Cultural Cultural heritage has been identified

Community engagement has been actioned

Environmental There is an environmental and social

The following routine environmental

• Biological and physiochemical

Occupational exposure monitoring

Emissions monitoring equipment for the

There are no records of any additional

Site management advised that there are no

Copies of Management plans for the Site

• Cyanide Management Plan

TSF 1 was constructed in four stages, from

TSF WEX was designed by Coffey in 2015,

Additional Storage Capacity

Preliminary studies have been undertaken

Design and management of the Gosowong

Decant water is pumped to the TSF

Labour The Gosowong includes an extensive range

• 972 PT NHM full time equivalent

A review of the available data indicates that

In terms of redundancies on mine closure, a

Extensive functional advisory support

The Gosowong Indonesian workforce are

Of the Indonesian employee workforce:

• Local Employees 550

• National Employees 406