HIGHLANDS Pacific Ltd and its joint venture partner Anglo American plc have commenced a US$3 million exploration drilling programme at the remote Star Mountains copper/gold tenements in Papua New Guinea.
The campaign will involve four diamond drill holes of approximately 800 metres each at two highly prospective targets – Unfin and Fune – which have been identified through extensive airborne surveys and fieldwork during the past 12 months.
Drilling has commenced at the first hole at Unfin, with a second rig to begin drilling at Fune. Highlands said that initial assay results are expected to be received by the end of the year, with the campaign scheduled to be completed by January 2017.
The exploration campaign builds on drilling completed in 2015 which confirmed the presence of mineralisation at the nearby Olgal and Kum Kom prospects. Aero-magnetic surveys, ZTEM surveys and extensive prospect mapping over the past 12 months identified Unfin and Fune as the two most promising untested targets in the tenements, and the current drilling is designed to test the potential for mineralisation at depth.
Nine holes were drilled in the 2015 campaign for a total of 5387 metres, with results confirming the presence of copper/gold mineralisation at Olgal and Kum Kom.
Highlands managing director John Gooding said in late October that the programme was proceeding to schedule, with drill pad preparations and logistics completed to plan.
“We are working closely with our joint venture partner Anglo American, and we are confident the campaign will continue to provide a wealth of information to support the potential for a major copper porphyry system at Star Mountains.
“The work we are doing builds on the earlier drilling completed in 2015 which confirmed the presence of mineralisation in the nearby Olgal and Kum Kom prospects. Aero-magnetic surveys, ZTEM surveys and extensive prospect mapping over the past 12 months have identified Unfin and Fune as the two most promising untested targets in the tenements, and this drilling campaign will test the potential for mineralisation at depth,” he said.
The campaign is being funded by Anglo American, in accordance with the farm-in agreement announced in 2015. The joint venture was finalised on the following terms:
* US$10 million initial payment – Anglo American paid Highlands US$10 million in two tranches of US$5 million each.
* Phase 1 (51% interest) – Anglo American will initially acquire a 51% interest in the Joint Venture with 15% vesting upon a farm-in spend of US$25m over four years and 36% vesting upon the declaration of a 43-101/JORC compliant Inferred Resource of 3 million tonnes of contained copper equivalent within 5 years of execution.
* Phase 2 (80% interest) – Anglo American can move to an 80% interest in the Joint Venture by completing a Bankable Feasibility Study 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 the completion of the BFS. Anglo American will recover this US$150 million from a portion of Highland’s share of project cashflows once in production.
* Management – Highlands will manage the project however Anglo American will have the right to take over management when they have spent US$25 million in project expenditure.
The 100% Highlands owned Star Mountains exploration tenements, which include Nong River EL1312, Mt Scorpion EL1781, Munbil EL2001 and Tifalmin EL1392, cover 515 sq km and are located approximately 20km north east of the Ok Tedi mine and 25km from the support town of Tabubil, in the West Sepik Province of PNG. Highlands has identified 17 copper gold targets to date and drilled six of these targets, of which all but one encountered mineralisation.