MOUNT Kare towers 2,750 metres in the midst of the jagged limestone mountains of the central range. Peter Ryan, author of a book on the Mount Kare gold rush, says the mountain was too high, too wet, too infertile and too wholly repellent to permit even the hardy Papua New Guineans to dwell there.

In late 1987, geologists of CRA, the Australian offshoot of London's giant Rio Tinto Zinc Corp that had taken up a prospecting authority in the area, discovered an outcrop of gold mineralisation near the uninhabited Kare Puga marshland. This led to hopes of a rich "hard rock" mine. But they also found alluvial gold and nuggets all around, apparently brought down by a giant landslide from the mountain.

The thrilled CRA geologists decided to take a Christmas break before starting full-scale drilling operations. But when they returned, they found a native gold rush under way, thanks to a former CRA labourer's accidental discovery of a nugget near the company's exploration drill. Through 1988 and 1989, people worked the gold in the soft clays, mud and crumbly soils with crowbars, shovels and washing dishes. At the height of the rush, the once-deserted mountain had at least 7,000 diggers.

When CRA tried to set up a mine, it faced a question typical of PNG: Who owns the land on which the mine would stand?

Moreover, the Mt Kare area lay astride two provinces -- Enga and the Southern Highlands -- with no boundary marking the border. Politicians from both provinces claimed Mt Kare as their people's traditional land. After several meetings between the landowners and the company failed to produce an agreement, the Special Mining Lease was granted to the Mount Kare Alluvial Mining (MKAM) Pty Ltd -- 49 per cent of whose equity was held by the Kare Puga Development Corp Pty Ltd (KDC), which represented 6,000 landowners from both provinces, and 51 per cent by Pacific Minerals, a CRA subsidiary. MKAM was the first mining company in PNG in which local people held an equity stake.

November 1990: CRA's production run of gold starts.

January 1992: Many landowners are still unhappy about the deal. An armed gang burns down the mining site. Mining operations resume several months later, but KDC keeps demanding for CRA's 51 per cent share in MKAM.

February 1993: The company suspends operations and decides to hand over the mine to KDC, but on condition that it retains exploration rights in the area and that two Perth-based mining companies, Oakland and Menzies, do not get involved in the mine.

March 1993: PNG Supreme Court rejects CRA appeal to dismiss petition of Perth companies challenging exploration rights.

April 1993: CRA hands over mine ownership to KDC unconditionally. KDC enters into an agreement with the Perth companies, under which the latter will pursue a joint venture with a mining company in return for 40 per cent of the profits.

Several landowner groups form a splinter company, Mt Kare Joint Venture, and take KDC's agreement with the Perth companies to court, arguing that such a momentous decision cannot be taken without discussing the matter with genuine landowners.

Late 1993: Prime Minister Wingti hands over the mining lease to the local landowners and declares the Mt Kare dispute closed. But newspapers warn: "CRA's exodus does not necessarily mean the end of trouble with the 6,000 landowners still divided into pro-CRA, pro-Oakland and anti-foreigner camps."