Why Is Bougainville Copper’s Half-Year Loss Deepening Amid Exploration Restart?

Financial Performance and Position

Bougainville Copper Limited (ASX, BOC) has reported a net loss after tax of K7.357 million for the six months ended 30 June 2025, a deterioration from the K6.253 million loss recorded in the same period last year. This widening loss reflects a modest decline in income, primarily due to reduced dividends and interest income as the company liquidated some investment assets to fund operations.

General and administration expenses rose sharply, driven by the recommencement of exploration activities under the EL01 licence and increased legal and advisory fees related to ongoing Panguna mine legacy proceedings. Notably, no depreciation was charged during the period, reflecting the current non-utilisation of depreciable assets.

On the balance sheet, Bougainville Copper maintains a stable financial position with no debt and liabilities remaining steady. However, total assets decreased slightly due to partial drawdowns of investments to support expenditures and the reclassification of investment holdings to non-current assets. Net tangible assets per share declined marginally to K0.198.

Operational and Strategic Developments

The company marked several significant events during the period. The passing of former CEO Johnny Patterson Auna was a notable loss; he had been instrumental in steering the company’s strategic transition into exploration under EL01. Valachie Nicholas Quagliata was appointed as the new Company Secretary, signaling continuity in governance.

Importantly, Bougainville Copper commenced infrastructure remediation works in collaboration with the Autonomous Bougainville Government (ABG) and Rio Tinto, following a Memorandum of Understanding signed earlier. These works, which began in June 2025 and will continue through 2026, focus on critical sites including the Jaba Pump Station, Momau River Bridge, and former Panguna town workshop structures. These efforts align with recommendations from the Panguna Mine Legacy Impact Assessment, with initial results expected by the end of 2025.

Legal and Regulatory Landscape

The company remains embroiled in a class action lawsuit filed in 2024 in Papua New Guinea’s National Court, alleging environmental and social harm stemming from the Panguna mine’s closure in 1989. Both Bougainville Copper and Rio Tinto are defendants. The case is at a preliminary stage, with no financial provision recognised as of 30 June 2025 due to the uncertainty of outcomes and impacts.

Meanwhile, exploration activities under the EL01 licence have been operationalised following its renewal for five years in early 2024. The company has initiated landowner access and compensation agreements, commenced technical and pre-feasibility studies, and continued stakeholder engagement, all in compliance with the Bougainville Mining Act 2015 and PNG national law.

Community Engagement and Financial Outlook

Bougainville Copper continues to support the local community through scholarships and sponsorships for cultural and youth sports programs, reinforcing its social license to operate amid complex legacy issues.

Despite these activities, no dividend was declared for the half-year period, reflecting the company’s ongoing investment in exploration and legal contingencies. The independent auditor, KPMG, issued a qualified review opinion due to valuation uncertainties surrounding K1.1 million in unlisted investment units held by a subsidiary, underscoring challenges in asset valuation amid limited market data.