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Kainantu Resources announces acquisition of Kili Teke gold-copper project in PNG from Harmony Gold

Published: 08:32 06 Apr 2022 EDT

Kainantu Resources Ltd -
Salthouse said HGEL had already made "excellent progress" to date in developing the project, delineating an impressive copper-gold resource of 800Kt copper and 1.8Moz gold

Kainantu Resources Ltd (TSX-V:KRL) revealed it is buying the Kili Teke gold-copper project in Papua New Guinea (PNG)—an advanced exploration asset with an existing resource and potential for more discoveries.

The company has struck a definitive agreement with Harmony Gold (NYSE:HMY) (PNG) Exploration Limited (HGEL), a subsidiary of Harmony Gold (NYSE:HMY), to acquire 100% of the property, which comprises exploration licence EL 2310 and sits 40km west-northwest of the Porgera gold mine.

"The project lies on the highly prospective Papuan Fold Belt which hosts world-class projects, such as Ok Tedi, Frieda River and Porgera. We look forward to exploring and developing another potential world class project for the region," noted Matthew Salthouse, CEO of KRL, in a statement.

"This transaction moves KRL from a greenfield high potential explorer into being a resource development company with upside. For a junior to achieve this after a year of listing is a testament to the team's vision on growing KRL via accretive transactions in combination with on-going field work."

READ: Kainantu Resources notes successful airborne geophysical survey at KRL North and KRL South projects in PNG 

Salthouse highlighted that HGEL had already made "excellent progress" to date in developing the project, delineating an impressive copper- gold resource of 800Kt copper and 1.8Moz gold; with the deposit remaining open to the southeast and down depth.

"Through the grant of warrants to acquire equity in KRL of up to 9.9%, HGEL has an option to engage further," he added.

"KRL will continue to deliver on our strategic objectives with Kili Teke a key catalyst in driving shareholder value as we develop as an Asia Pacific gold-copper mining company."

Under the terms of the transaction, KRL will pay HGEL an initial cash consideration of US$1 million, payable in two instalments, namely US$500,000 on closing (targeted for May 31, 2022), and US$500,000 on receipt of post-closing regulatory approvals (expected in late 2022 or early 2023).

KRL intends to work towards a preliminary economic assessment (PEA), then a feasibility study. If KRL views the project positively at each step, KRL will make further payments to HGEL of US$3 million and US$4 million respectively. The company will also pay HGEL a 1.5% net smelter royalty from future mine revenue.

There is also potential for Harmony to become a strategic investor in KRL under the deal, with HGEL to be issued warrants equal to 9.9% of the issued share capital of KRL on closing.

Since acquiring the project in 2014, HGEL has drilled 54 holes (for 36,325m), including 7 (for 3,683m) to test exploration targets.

Using all currently available data, the project hosts an inferred resource of 237 million tonnes (Mt) at 0.34% copper for 0.8 Mt of copper and 0.24 g/t gold for 1.8 million ounces (Moz) gold and 168 parts per million (ppm) Molybdenum (Mo), for 0.04Mt Mo.

Significantly, the defined resource does not include all high-grade skarn intercepts because the drill density was considered insufficient to prove the continuity so these remain a viable exploration target.

KRL highlighted that the acquisition moves its overall portfolio further along the development curve, and increases its exposure to copper as well as gold. It adds a sizeable gold-copper resource into its asset base, potentially enabling a re-rating in due course, the company added.

Closing of the transaction is subject to customary closing conditions, including the approval of the Toronto venture exchange.

Contact the author at giles@proactiveinvestors.com

Kainantu’s Matt Salthouse talks through the 'terrific opportunity' offered...

Kainantu (KRL) has been looking for a project like this for a while, Salthouse told Proactive. The deal gives KRL a significant copper-gold asset that's more advanced in its development than the current portfolio and also brings with it a resource.  It’s in Papua New Guinea in an area that...

on 19/4/22