GLOBAL mining giant Anglo American plc has advised Highlands Pacific that it intends to withdraw from the Star Mountains exploration joint venture in Papua New Guinea.
Anglo American told Highland that following a review of its global exploration portfolio it will relinquish its vested 15% holding in the project, leaving Highlands with a 100% interest and looking for a new JV partner.
Highlands managing director Craig Lennon said that, while he was disappointed that Anglo American would not be continuing with the joint venture, its involvement over the past three years had greatly enhanced the understanding of the geology of the tenements and substantially increased the value of the project.
“We will now be free to introduce a new partner to continue exploration efforts,” he said. “Drilling to date has confirmed extensive mineralisation through the various prospects that have been tested to date, and we remain confident that further exploration will identify the source and structure of the mineralisation sufficiently to support a significant development project,” he said.
Anglo American and Highlands established the joint venture in February 2015 and since then Anglo American has funded an extensive exploration program including two diamond drilling campaigns. Anglo American has spent a total of US$38 million on the project including a US$10 million payment to Highlands Pacific for its initial entry into the project. This comes on top of significant funding by various project participants since the initial discovery by Kennecott in the late 1960’s when they found Ok Tedi’s Mt Fubilan deposit.
The Star Mountains exploration tenements, which include Nong River EL1312, Tifalmin EL1392, Mt Scorpion EL1781, Benstead EL2001, Mt Abemh EL2467, Ilam River EL2478 and Lake Louise EL2517 cover 1049 sq kms and are located approximately 20km north east of the Ok Tedi mine and 25kms from the support town of Tabubil, in the West Sepik Province of PNG
Drilling at the Star Mountains project has produced a number of exciting intercepts at various prospects over recent years including:
• 596m @ 0.61% Cu & 0.85g/t Au from 24 m down hole (Olgal, 2012),
• 22m @ 1.42% Cu & 0.57 g/t Au from 146m down hole (Kum Kom, 2013)
• 68m @ 0.97% Cu & 0.37 g/t Au from 280m down hole (Kum Kom, 2013)
• 183 metres @ 0.53% Cu and 0.58 g/t Au from 168m downhole (Olgal Hole 19, 2016)
• 430 metres @ 0.39% Cu and 0.24 g/t Au from 168m downhole (Olgal Hole 20, 2016)
• 434.9 metres @ 0.52% copper and 0.72 g/t gold (Including 100 metres @ 0.82% copper and 1.39 g/t gold from 76m downhole) (Olgal Hole 17, 2016)
Highlands and Anglo American conducted a nine-hole, 5387 metre diamond drilling campaign in 2015 at the Olgal and Kum Kom prospects, followed by a seven hole 5620 metre campaign at Fune, Unfin and Olgal that commenced in October 2016 and was completed in the September quarter of 2017.
The Star Mountains exploration tenements cover 515 sq kms and are located within the prospective New Guinean Orogenic Belt, which hosts the Grasberg, Ok Tedi, Porgera and Hidden Valley mines, as well as the Frieda deposit. The tenements, which include Nong River EL1312, Mt Scorpion EL1781, Munbil EL2001 and Tifalmin EL1392, are approximately 20km north east of the Ok Tedi mine and 25kms from the support town of Tabubil, in the West Sepik Province of PNG.
The Star Mountains region has only been drilled twice in the last 50 years. The first drilling was conducted by Kennecott in the late 1960’s when the Mt Fubilan deposit was discovered, and subsequently mined by Ok Tedi Mining Limited. Highlands undertook a drilling campaign for three years from 2010 where 28 diamond drill holes were drilled over six prospects which produced some major intersections of copper gold porphyry mineralisation.
In December 2014, Highlands and Anglo American Plc (Anglo American) announced that they were forming a joint venture to undertake exploration and potential development of the Star Mountains project.
The joint venture and farm-in agreements consist of the following:
US$10 million payment – Anglo American has paid Highlands an initial US$5 million, with a second US$5 million due in February 2016.
Phase 1 (51% interest) – Anglo American can earn a 51% interest in the joint venture by spending US$25 million on exploration over four years, and declaring a 43-101/JORC compliant inferred resource of 3Mt of contained copper-equivalent within five years.
Phase 2 (80% interest) – Anglo American can move to an 80% interest in the Joint Venture by completing and funding a Bankable Feasibility Study (BFS) within 15 years of the execution of the Farm‐in and Joint Venture Agreements.
Development Free‐Carry – Anglo American will provide Highlands with up to US$150 million in project development funding as a deferred free‐carry following completion of the BFS.