Papua Mining, a UK company focussed on the exploration for and if commercially feasible, development of gold and copper deposits in Papua New Guinea, announces results for the year ended 31 December 2011.
Commenting on progress, Hugh McCullough, Chief Executive Officer, said:
“Our licence holdings make Papua Mining one of the more prominent explorers in the region. We are operating in a highly prospective area with a strong team of professional geologists and technicians with proven track records.
“We have carried out an intensive exploration programme over the past 12 months, the results of which have confirmed management’s confidence in the targets already identified and several promising new targets have also emerged. We are positive about our prospects for drilling success and we look forward to an exciting year ahead.”
The full annual report and accounts for the year ending 31 December 2011 are available on the Company’s website at www.papuamining.com.
|Papua Mining plc|
|Hugh McCullough||+353 1532 9535|
|Cenkos Securities– Nominated Adviser & Broker|
|Beth McKiernan/Ken Fleming||+44 131 220 6939
+44 207 397 8900
|Square1 Consulting – Financial Public Relations|
|David Bick/Mark Longson||+44 207 929 5599|
The year under review and 2012 to date have shown significant progress on the projects which are now owned by the Group (Papua Mining plc (“PM plc” or “Company”) and its subsidiary companies). Following the acquisition in December 2011 of Papua Mining Limited and its Papua New Guinea subsidiaries, Aries Mining Limited and Sagittarius Mining Limited, PM plc was granted admission to the AIM market of the London Stock Exchange on 2nd March 2012. At the same time, we carried out a placing of new shares with institutional and retail investors which raised new finance amounting to approximately US$11 million (approximately £7 million). These funds have been and will continue to be used to finance exploration on the Group’s copper/gold exploration properties in Papua New Guinea (“PNG”). At the time of Admission, PM plc’s initial public offering (IPO) was the only new exploration IPO to be carried out in the London market in 2012. That we were able to complete the IPO so successfully is a testament to the quality of the Group’s exploration portfolio and also to its strength of management.
The Group holds three exploration licences in PNG, one of which is in the process of renewal. Two of the three existing licences (EL 1462 and EL 1730) are in the West New
Britain Province while the third, EL 1766 lies in the East Sepik Province on the mainland of PNG. In addition, we have eleven new licence applications on New Britain island, many of which are at an advanced stage of the application and issue process. If all licence applications are granted, the Group will hold a total licence area of some 4,350 square kilometres.
PNG lies within the so-called “Ring of Fire”, a well established zone of volcanic activity, often associated with major copper/gold porphyry deposits such as those at Grasberg in the Papua Province of Indonesia, OK Tedi in PNG and the emerging, high grade copper porphyry deposit at Wafi Golpu in PNG, already one of the highest grade, major copper porphyries in the world. The existing licences and the licence applications all lie within this highly prospective region. At a more local level, the two West New Britain licences and the eleven applications lie close to known large mineralised systems, such as those drilled and reported by Coppermoly and Barrick at Nakru and Simuku, both immediately adjacent to our EL 1462. Our own geologists and field teams have also discovered high grade copper and gold mineralisation within our licence close to these major mineralised systems.
Using integrated geological, geochemical and geophysical survey data, we have now delineated four target zones in the Nakru region of EL1462, West New Britain, which we refer to as the Junction, Bullseye, Eleven and Flying Fox anomalies respectively. Additional coincident anomalies that show promising porphyry affinities have been identified at Plesyumi and Kori/Dagi, also within EL1462.
In the Ambunti Licence, our grid based, soil and rock sampling programmes have delineated a number of gold and copper targets, especially in the region of Mount Garamambu. The latter is associated with a significant magnetic body that is both strike and depth extensive.
In a copper porphyry environment, there is often a lot of “smoke” before one encounters the central “fire” of the porphyry itself. We have mapped many essential indicators of mineralised porphyry systems and the work over the coming months is directed to the integration of the results of all the work programmes to date in order to define the actual drilling targets. The major geophysical programme we will be commissioning shortly, will greatly assist in the design of the drill programmes on the Nakru targets. We expect to be drilling the first of these targets during the 4th Quarter of this year.
We are fortunate in having a Board and management with broad industry and financial experience. Hugh McCullough and Kieran Harrington, our two Executive Directors,
have strong industry background, with a particularly successful exploration track record in gold mine discovery in West Africa. Chris Muller, our Country Manager and Chief Geologist, based in PNG, was the Principle Geologist on the major Wafi Golpu copper porphyry project referred to above and was responsible for the drilling of the discovery hole on the Golpu West porphyry which transformed the Wafi Golpu deposit into the world class deposit that it currently is. Gunnar Palm, a Non-Executive Director, has a strong financial background in the banking and fund management areas. Since our IPO, we have welcomed Keith Lough to the Board, also as a Non-Executive Director. Mr. Lough is Chairman of our Audit Committee and has very relevant financial experience in the natural resource sector. My own background is in shipping and natural resources. I was a founder Director of Burren Energy (originally known as Sumo Oil Ltd) and remained as a director of Burren until its flotation on the London Stock Exchange in 2003. I am currently Deputy Chairman of Tsakos Energy Navigation which is quoted on the New York Stock Exchange and Chairman of StealthGas Inc., a shipping company which has 36 LPG ships under operation, and four product tankers. StealthGas Inc. was listed on the NASDAQ in October 2005.
As referred to above, the successful IPO in March raised almost US$11 million (approximately £7 million) in new funding. The new funding was provided by a combination of some large and well established financial institutions and other private, specialist retail investors. The funds raised will enable us to carry out our planned exploration programmes including up to 12,000 meters of drilling.
There has been some uncertainty recently in the political arena in PNG. A general election is scheduled for the end of June and it is hoped that the result of the election will be to provide certainty and increased political stability.
We have established ourselves firmly amongst the region’s explorers. With our large licence holding position and the extent of the area under application, we rank amongst the more prominent explorers in Papua New Guinea. We have assembled a strong team of professional geologists and technicians with proven track records in mine finding. We believe in the high prospectivity of our licence areas and we are therefore positive about our chances of success. Our successful fundraising earlier this year has provided us with the necessary finances to turn that prospectivity to account. It will be a very exciting year ahead.
Michael Gordon Jolliffe
18 June 2012
REVIEW OF OPERATIONS
Prospectivity of Papua New Guinea
The geology and mineralisation of Papua New Guinea (“PNG”) is a result of its location on the boundary between the Pacific and Australian tectonic plates which lie on part of the so-called “Pacific Ring of Fire”. Tectonic and associated hydrothermal activity along this plate boundary has led to a large concentration of economic deposits of gold, copper and other metals. Papua New Guinea is situated on a porphyry copper-gold belt which tracks part of the Pacific Ring. The porphyry copper-gold belt stretches across Papua New Guinea and into Papua Province of Indonesia.
PNG is prospective for porphyry copper-gold and epithermal gold, volcanogenic massive sulphide deposits, lateritic nickel-cobalt-chromite and bauxite occurrences, and placer deposits of gold, platinum, titaniferous magnetite and chromite. PNG has a number of mines producing primarily gold and copper including Ok Tedi, Hidden Valley, Porgera, Simberi, Tolukuma, Lihir and Sinivit. Grasberg, in the Indonesian half of New Guinea island, is one of the world’s largest metal mines and with reported reserves of 32.7 billion pounds of copper and 33.7 million ounces of gold, is the largest gold reserve of any deposit in the world. The Wafi Golpu discovery in Papua New Guinea is owned by a joint venture between Harmony and Newcrest. It is already one of the highest grade major porphyry copper deposits in the world and, in July 2011, Newcrest reported an updated mineral resource estimate of 9 million tonnes of copper and 26.6 million ounces of gold. More recent announcements on Wafi Golpu point to a target of 15 million tonnes of copper and 40 million ounces of gold, which, if realised, would rank as one of the world’s largest copper-gold deposits. The terrain in PNG is densely forested and difficult to access so that until the relatively recent rise in mineral prices, the costs of exploring and mining these areas have inhibited exploration activities and parts of Papua New Guinea, including the target areas identified by the Group, have not yet been fully explored. There is, however, now significant exploration activity in PNG with a number of companies active in exploration and production of copper and gold including Harmony, Newcrest, Newmont and Barrick and we believe that there is potential for further significant discoveries in PNG.
The Group’s Projects
Through its two subsidiaries, Sagittarius Mining Limited and Aries Mining Limited, Papua Mining holds Exploration Licences EL 1462 (which is currently subject to a renewal process) and EL 1730 in the province of West New Britain, and EL 1766 in the province of East Sepik. The Group also has eleven Exploration Licence applications, all of which are for areas on New Britain Island, and may seek to extend its exploration programmes to the areas covered by such applications if and when such applications are granted.
The Group has eleven pending Exploration Licence applications for areas on New Britain Island. These are ELAs 1731, 1802, 1803 1804, 2048, 2049, 2050, 2051, 2144, 2145 and 2146 which adjoin or are nearby to the Group’s Exploration Licences 1462 and 1730.
New Britain project
The two granted Exploration Licences (EL 1462 and EL 1730) in West New Britain Province cover an irregular elongated shape between Kimbe, the capital of the West New Britain province, on the north coast, towards the settlement of Fulleborn on the south coast. Kimbe has a deep water port that can be used to bring in vehicles and drilling equipment. This area is generally very heavily vegetated. The northern part is covered extensively with oil-palm plantations and has a relatively good road infrastructure. Access to EL 1730, which borders Kimbe, is therefore relatively easy.
The central and southern parts of EL 1462 are dominated by the rugged Whiteman Mountain ranges which have altitudes ranging from 200m to 1,830m above sea level at the highest point. Numerous rivers and streams dissect the area and drain to the north and south coasts from the ranges. Access to parts of EL 1462 is generally very difficult and in some instances can only be reached by helicopter or light aircraft or via logging tracks.
The Group has carried out extensive data searches and accumulated a large amount of historic exploration data from the West New Britain province. The Group’s project team collated a comprehensive electronic database, digitised maps and ground-truthed data points over each of the Licence Areas and identified targets to further explore.
Known Mineralisation in New Britain
Both EL 1462 and EL 1730 are situated in the so-called Kulu-Fulleborn trend, a prominent NW-SE belt of mainly intermediate volcanic rocks and associated, sub-volcanic intrusives with potential for large-scale copper-gold porphyry deposits.
In this part of central New Britain several types of mineralisation have been previously reported including: porphyry copper–gold mineralisation, copper skarn mineralisation and copper–gold mineralisation with an epithermal overprint.
Contained within and surrounded by the Group’s EL 1462 are three smaller licences which are being explored by Australian junior company Coppermoly Limited in Joint Venture with Barrick Gold. Since the 1960’s, regional studies undertaken by a number of companies had identified gold, molybdenum and copper targets within these areas at Plesyumi and Mt Nakru, Simuku and Kulu. The Coppermoly/Barrick Joint Venture project is at a relatively advanced stage of exploration and some very positive drilling results were reported by Coppermoly in the Nakru and Simuku areas during 2010 and 2011.
In August 2010 Coppermoly reported an intersection of 214 metres at 0.9% Cu and 0.33g/t Au at Nakru at a location some 1,000 metres from the Group’s concession boundary. At Coppermoly’sSimuku target the porphyry copper system has an Inferred Mineral Resource of 200 million tonnes grading 0.47% copper equivalent (0.3% Cu.Eq. cut-off) for 700,000 tonnes of copper (1.5 billion pounds). In December 2011 Coppermoly reported a new drilling intersection of 1,002 metres at 0.24% copper and 60ppm molybdenum at the Simuku Tobarum prospect, a location some 2.5 kilometres from the Group’s concession boundary.
Post year end, on 7 June 2012, Coppermoly announced that it had been informed by Barrick that it intends to commence a process of divestment of its 72% interest in the Coppermoly licences
Exploration by the Group on EL 1462
The Group acquired data from the aeromagnetic surveys covering approximately 80 per cent of EL 1462 (before the shed-off of 50 per cent. of the area), plus some additional areas to the north, south and east of EL 1462. The surveys provide good information about the local magnetic and radiometric settings of the known mineral occurrences.
The data were then recompiled and processed/filtered to provide a basis for the selection of target areas for further field follow-up. The intent of the geophysical reprocessing was to classify the responses over the known occurrences of mineralisation and to identify target areas within our concession areas which display similar geophysical characteristics.
Using the compiled historical data and the results of the geophysical study the Group embarked on a field exploration programme to follow up and test the numerous targets. Fieldwork commenced in June 2010. The Group’s field teams completed detailed, grid-based, geochemical soil sampling programmes, rock chip sampling, geological mapping and prospecting in areas proximal to Coppermoly’sNakru, Plesyumi, Simuku and Kulu targets. By May 2012 almost 5,000 soil samples and 2,000 rock samples had been collected by the New Britain field crews.
At Nakru East, copper and gold soil geochemistry anomalies were delineated by our field team during 2010 and 2011 close to the Nakru 1 prospect which was recently the subject of the intensive drilling campaign by Coppermoly/Barrick. At Nakru 1 Coppermoly have reported significant copper-gold mineralisation in a number of intersections centered on a diatreme breccia volcanic centre. In 2011, our alteration mapping in the area confirmed silica-alunite and dickite-kaolinite-pyrite alteration assemblages at the Junction prospect some 2km east of the Coppermoly/Barrick Nakru 1 prospect, confirming the clear potential for a buried porphyry system nearby.
The 2011 mapping and sampling programme also identified significant copper mineralisation in outcrop in a number of localities within a 10 kilometre radius of this zone including our Eleven and Flying Fox target zones, some 5 to 6 km northeast of Coppermoly/Barrick’sNakru gold-copper prospects. Significant grades of over 4% Cu have been sampled to date in this area.
At Plesyumi South, in-situ rock sampling south of the Plesyumi area within the Group’s EL 1462 Licence Area returned grades of up to 12% Cu and over 2g/t Au. The work to date suggests a minimum target zone strike length of 2km within a NE-SW trending anomalous zone and the target zone remains open to the S and SW. Canadian major company Placer
Inc and partners in the early 1970s identified a copper-gold porphyry system in the Plesyumi area. They carried out diamond drilling programmes totalling 21 boreholes which resulted in a best intersection of 44 metres at 0.85% Cu. Our geologists’ interpretations suggest that the mineralisation intersected lies on a structure that extends into our EL1462 area.
In the Kori and Dagi River drainages, in the northern part of EL 1462, rock-chip sampling was completed during May-June 2011. 265 samples were collected and showings of copper mineralisation were noted by the field crew at a number of locations. Assays reveal that anomalous copper, gold and zinc values occur over a north-south distance of some 5 to 6 kms. Twenty three samples returned values greater than 1,000ppm Cu, with a maximum value of 3.8% Cu. Twenty one samples returned values greater than 1,000ppm Zn, with a maximum value of 3.6% Zn. Gold assays included a maximum value of 7.87g/t Au. Five samples returned values greater than 0.5g/t and ten samples returned values greater than 0.2g/t Au.
In recent months we have made a number of additions to our geological field team in New Britain and field-work has been significantly stepped up. During the first quarter of 2012, geochemical surveys have been extended at Nakru and Dagi-Kori where areas of 40 square kms and 20 square kms respectively have now been covered by 400 metre by 50 metre soil sampling grids. The surveys have confirmed the strong prospectivity of both areas. Alteration mapping on selected targets began in March and is ongoing. The field-work is prioritising targets and defining areas for ground based IP and EM geophysical surveys planned for two targets ahead of our first drilling programme. We have scheduled the geophysics for July/August 2012. The first drilling programme, in the Nakru area, is scheduled to begin before the end of the year, possibly as early as September next.
The Board is very encouraged by the results of the fieldwork completed to date. The geophysics modeling, soil and rock geochemical sampling, and the alteration mapping have all produced positive results, with a number of coincident anomalies identified. We expect the planned IP/EM surveys to yield the final information that we need to complete the drilling planning. We have been in discussion with a number of drilling companies in PNG and currently anticipate booking one drill rig before the end of July 2012.
The excellent work of our field teams along with the drilling results from the other companies mentioned above give a clear indication of strong mineralisation occurring throughout the Kulu-Fulleborn trend and highlight the potential for economic deposits of mineralisation existing within our licence areas.
EL 1766 in the East Sepik Province covers 361 sq. kms of low forested hills surrounded by the Sepik River plains/swamps east of the Ambunti Government Station. The Licence covers the area from the Nawi and Yerekai Villages to Mount Garamambu, then south west to the western fringes of the Hunstein Range. The Sepik River valley is a drowned mature river system resulting in large areas being covered by swamps and shallow fresh water lakes.
Ambunti is accessible either by light aircraft or by dugout canoe. No maintained roads exist within the Ambunti area and footpaths are the only land-based access within the Licence Area. The target areas in EL 1766 are surrounded by water and can be accessed by motorised dugout canoe. Barges, capable of carrying heavy machinery/equipment, can be towed to the edge of the EL 1766 Licence Area along the major Sepik River.
Previous work on EL1766
The EL1766 area has seen some high grade gold occurrences reported from reconnaissance surveys by a number of companies working on the PNG mainland since the 1960s. However, no reverse circulation or diamond drilling has been carried out by any former licencee in the area. From our research we believe that the first recorded exploration within the area was between 1968–1970 when International Nickel Southern Exploration Limited, examined the nickel and base metal potential of the area. Subsequent workers reported high grade gold occurrences in rock samples from within a 16km long zone which connects the area around the village of Ambunti on the Sepik River in the northwest of the concession with Mount Garamambu, a 505 metre high hill near the eastern concession boundary. We have called this zone the Ambunti-Garamambu Trend (“AGT”). Examples of gold grades in rocks sampled by previous licencees include 710g/t in the Banang River area and 210g/t in the Limpeling River. Artisanal miners have reportedly found large gold nuggets but historical exploration has failed so far to locate a significant source for the gold.
We regard the entire trend as a significant target zone for gold mineralisation and our geologists recognise a porphyry copper target at the eastern end of the zone, where a large dioritic intrusion underlies and forms Mount Garamambu.
Exploration by the Group on EL1766
The initial work programme at Ambunti was similar to that applied to West New Britain. We set out to acquire as much historic data as possible and to integrate this into a comprehensive database. As is the case with the New Britain project, the Ambunti database includes aeromagnetic data over a 3,140 sq. km area that encompasses almost all of EL 1766. Several structural patterns are evident in the aeromagnetic data. A regional NW-SE grain to the data is apparent. On a regional scale this equates to a structural corridor within the New Guinea Thrust Belt which hosts a number of significant gold and gold-copper deposits including the Frieda/Nena, Yandera and Kainantu deposits as well as the Ramu Nickel-Cobalt deposit.
Initial field-work was a soil sampling grid in the north west end of the AGT and the programme delineated gold and base metal anomalism with a NW-SE trend over hundreds of metres. The soil results display an overall NW-SE trend. The field team located trenches excavated by a previous licencee during the 1980s and resampling of the trenches confirmed significant in situ gold mineralisation. There were a number of ore grade intercepts including 17m at 2.8g/t Au in Trench TR1 and 11m at 2.0g/t Au in Trench TR3, both towards the western end of the trenched area. The sampling by the previous licencee had produced intersections of 11m at 5.8g/t Au and 8m at 3.6g/t Au, 7m at 2.7g/t Au and 15m at 2.4g/t Au. The trench sampling confirmed the NW-SE mineralisation trend but also indicates an orthogonal NE-SW set of structures. Our geologists have seen visible gold in float samples from a number of the creeks along the Ambunti-Garamambu Trend.
During 2011, our field team concentrated on extending the geochemical surveys along the entire 16km length of the Ambunti-Garamambu trend. By the end of 2011 we had
collected a total of more than 3,000 soil samples and approximately 1,000 rock samples. Significant anomalism of both gold and base metals was outlined at a number of locations along the trend. Gold anomalism is strongest towards the western end of the trend. Copper anomalism is strongest and very extensive towards the eastern end at Mt Garamambu.
3D inversion modeling of the aeromagnetics data for the area was completed in April 2012. The study identified areas where apophyses of a large batholith, interpreted to underlie the entire area, come closest to the present ground surface. There is a good correlation between the modeling and the results of the geochemical sampling with the strongest base metal geochemical responses associated with these apophyses. The geophysical and geochemical modeling is being used to determine areas for more detailed sampling and alteration mapping. Follow-up sampling has been completed during the first quarter of 2012. The area appears generally amenable to trenching and we have planned a minimum of 2,000 metres of trenching on at least three targets along the AGT. We have not yet made a decision on whether ground geophysics will be undertaken before our initial drilling in EL1766.
At the time of writing our field team is completing initial reconnaissance mapping and sampling over the southern half of EL1766.
We had previously targeted the last quarter of 2012 for our initial drill programme on EL1766. Depending on the progress of our proposed drilling programme on the New Britain project we may decide to defer the Ambunti drilling until early 2013.
Papua Mining plc
Consolidated statement of comprehensive income at 31 December 2011
The Company has elected to take exemption under section 408 of the Companies Act 2006 to not present the parent Company income statement. The loss for the Company is shown in the Statement of changes in shareholders’ equity.
Papua Mining plc
Consolidated statement of financial position at 31 December 2011
Papua Mining plc
Consolidated statement of changes in equity for the year ended 31 December 2011
Papua Mining plc
Consolidated statement of cash flows for the year ended 31 December 2011
1. General information
For the purposes of these financial statements, the term “PM plc Group” is defined as the companies Papua Mining plc (the “Company”), Papua Mining Limited, Aries Mining Limited and Sagittarius Mining Limited. The PM plc Group’s main activity is the exploration for gold and copper resources in Papua New Guinea, as set out in the Directors’ Report.
The financial information contained in this document does not constitute statutory financial statements within the meaning of section 434 of the Companies Act 2006. The consolidated statement of financial position as at 31 December 2011 and the consolidated income statement, consolidated statement of comprehensive income, consolidated cash flow statement, consolidated statement of changes in shareholders’ equity and associated notes for the year then ended have been extracted from the Group’s 2011 statutory financial statements upon which the auditors’ opinion is unqualified, and does not include any statement under Section 498 (2) or (3) of the Companies Act 2006. The figures for the years ended 31 December 2010 and 2009 have been extracted from the unaudited statutory financial statements.
2. Annual Report and Notice of Annual General Meeting
The Annual Report and Accounts will be dispatched to shareholders on 21 June 2012 and will also be available on the Company’s website from 18 June 2012. The Annual General Meeting of the Company has been convened at 11.00 am, on 16 July 2012, at the offices of Fasken Martineau, 17 Hanover Square, London W1S 1HU.