HIGHLANDS Pacific and a wholly owned subsidiary of Anglo American have executed the joint venture and farm-in agreements for the Star Mountains copper gold project, in Papua New Guinea.
The exploration and development joint venture proposal was originally announced on 8 December 2014 and the general terms of the joint venture and farm-in remain as announced at that date.
In a statement, Highlands Pacific said the agreement outlines a US$10 million payment to be made by Anglo American to Highland Pacific in two payments of US$5 million.
Phase one of the agreement means Anglo American can earn a 51 per cent interest in the joint venture by spending US$25 million on exploration over a four year period and declaring a 43-101/JORC compliant inferred resource of three million tonnes of contained copper equivalent in five years.
In phase two, Anglo American can obtain an 80% interest in the joint venture by completing and funding a bankable feasibility study within 15 years of the execution of the farm-in and joint venture agreements.
Outlined in the agreement, Anglo American will provide Highlands with up to US$150 million in project development funding as a deferred free-carry following completion of the bankable feasibility study.
Highlands will continue to manage the project, with Anglo American obtaining the right to take over management when it has invested US$25 million in project expenditure.
Highlands said preparation for the upcoming exploration and drilling campaign will now ramp-up, with a four hole, 3,000 metre campaign to commence in April.
A helicopter-magnetic survey is currently being completed and a LIDAR survey will commence in the coming weeks.
Highlands Pacific managing director John Gooding said the company believed Star Mountains has a great deal of potential.
“The area has only been drilled twice in the last 50 years,” he said.
“First by Kennecott in the late 1960’s when they discovered the Mt Fubilan deposit that Ok Tedi Mining has been operating for decades and then by Highlands 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,” he said.
“Anglo American is a highly reputable international company that brings great exploration and development experience to the Star Mountains project. Together we can move forward with a defined exploration program that will test the size and grade of these exciting targets,” Mr Gooding said.
Star Mountains exploration tenements, which include Nong River EL1312, Mt Scorpion EL1718, Munbil EL2001 and Tifalmin EL1392, are located about 20 kilometres north of the Ok Tedi mine, in the West Sepik Province.