Image: Frontier Resources
While market conditions continue to challenge junior mining companies working in Papua New Guinea, some small mining companies such as Gold Mountain and Frontier Resources are experiencing encouraging results from their exploration programs in the country.
Speaking with Business Advantage PNG, Gold Mountain Managing Director Tony Teng says market conditions have made operations ‘incredibly challenging’ for the company in Papua New Guinea.
‘One of the biggest challenges for a small company like Gold Mountain is raising capital for mining projects, especially during the exploration phase,’ he says.
‘Exploration activity in the country hit a low of 256.2 million kina in 2014 and remained low at 325.5 million kina in 2015.’
‘With investors very wary of how ‘high cost’ operations can be in-country, we have kept a distinct focus on ensuring we are a low cost and low overhead company,’ Teng adds.
Exploration activity in PNG hit a low of 256.2 million kina in 2014 and remained low at 325.5 million kina in 2015,according to the PNG Chamber of Mines and Petroleum’sMining and Petroleum Review.
The Mineral Resources Authority anticipates total spending in 2016 will drop below 2015 figures, but says it is too early to report whether it will be lower than the total spend figures for 2014.
While some juniors are winding back their exploration programs, Gold Mountain is bucking the trend by moving forward with exploration at Crown Ridge at Wabag in Enga Province.
Recent trenching resulted in six trenches that produced positive results.
Five of these centered in a cluster where every pan collected free gold.
World class projects
Encouraged by these results, company Director of Exploration, Matthew Morgan, believes that these systems have the capacity to produce world-class gold and copper projects.
Following results from trenching, Morgan says they have commenced an intensive bulk sampling exercise, with possible feasibility studies to follow, towards a Mining Lease application with the PNG Mineral Resource Authority.
‘In July, Gold Mountain experienced an oversubscribed capital raising.’
‘As some of the free gold is very shallow, at around two metres depth—which is almost under the grass in some zones—there may be the potential for a low cost, low strip ratio free gold resource that could be quickly bought forward into production generating significant cash flow for the company,’ Morgan says.
The company remains keen to pursue identified drill targets following the establishment of a profitable shallow mining project.
In July, Gold Mountain experienced an oversubscribed capital raising, which Teng says highlights confidence in the company’s assets.
‘We believe that the results to date warrant further exploration and work, and the investor community understands this and wishes to continue supporting the projects.’
‘McNeil is confident in the company’s current projects in Papua New Guinea and is keen to explore further.’
‘Papua New Guinea is blessed to be situated in a geological ‘honey pot’ that has produced multiple world-class resource projects to date, and a population that is amicable to mining and resource investment,’ Teng says.
Frontier Resources Managing Director Peter McNeil expresses similar views, and says drilling is strongly warranted at both of its exploration licenses to capitalise on increased US dollar gold prices and recently improved investor sentiment.
In September, Frontier commenced drilling at Swit Kai, at its Bulago prospect in Southern Highlands Province.
‘The amount of drilling that we undertake will only be limited by the amount of capital that we have,’ says McNeil. He is confident in the company’s current projects in PNG and is keen to explore further.
Frontier Resources will undertake a capital raising later in 2016 to enable it to undertake exploration and drilling on the copper-gold targets at Muller. The aim is to complete additional drill assessment at the Bulago porphyry copper-gold and to cover working capital and costs.