New Guinea Gold Corp (C-NGG) - News Release
New Guinea to acquire up to 100% of gold projects
New Guinea Gold Corp NGG
Shares issued 19,234,094 Jun 12 2002 close $ 0.09
Wednesday June 12 2002 News Release
Mr. R.D. McNeil reports
NEW GUINEA GOLD CORPORATION (THE COMPANY) TO ACQUIRE UP TO 10 ...
The company has reached agreement with Macmin Ltd., an Australian Stock Exchange listed company, to acquire Macmin's wholly owned subsidiary, Macmin (PNG) Limited), which holds title to seven exploration licences and one mining lease in Papua New Guinea (PNG) Macmin is majority shareholder of the company, holding 58.06-per-cent equity interest (see news release in Stockwatch of Feb. 28, 2002).
The acquisition of Macmin (PNG) will allow the company to capitalize on current interest in the gold markets. Macmin intends to focus on silver, based on its Texas silver project in southeast Queensland, Australia, where a major drilling program, financed in April, 2002, is currently in progress. The projects to be acquired through the acquisition of Macmin (PNG) are all advanced gold or gold/copper projects, three of which are at the feasibility stage. By repositioning its major gold assets into a separate entity, that is the company, Macmin will maintain valuable interests in the silver market via its Texas project and in the gold markets through its holdings in the company, a mutually beneficial relationship which has existed since 1996. The company intends to immediately embark on discussions with others refinancing, and/or joint venture arrangements in order to organize and initiate work programs on all projects.
The terms of the acquisition are as follows:
The company will convert all debt (estimated to be $250,000 by the completion of this deal) to shares. Total shares to be issued will be approximately 2.75 million;
The company will issue to Macmin shares equivalent to 10 per cent of it's issued capital after the debt conversion. Total shares to be issued are estimated at approximately 2.25 million;
The company will grant to Macmin a 1-per-cent gross, or net smelter return (NSR) royalty on any minerals or metals produced from these licences;
In the event that production at any mine that is subsequently developed exceeds 50,000 ounces of gold or gold equivalent per year, the company will issue further shares equivalent to 9 per cent of its issued capital at that time;
The company will reimburse to Macmin all costs of the transaction, including any PNG stamp duty; and
The deal is subject to due diligence and any regulatory or shareholder approval that may be necessary.
The company currently has a 25-per-cent equity interest in two of the gold projects which will be acquired -- Feni and Normanby projects.
The following description of the projects is quoted from a Macmin summary (April, 2002), which appears on Macmin's Web site at www.macmin.com.au. Extensive additional technical data are also available at that Web site. Any reserve/resource figures are in accordance with guidelines issued by the ASE and the Australia Institute of Mining and Metallurgy.
Macmin (PNG) Limited (Macmin PNG) is, at present, a wholly owned subsidiary of Macmin. Macmin PNG in Papua New Guinea, holds title to five gold projects and two copper/gold projects. The projects are all at an advanced exploration stage with defined resources or encouraging drill hole intersections, which contain economic grades (in normal circumstances) of gold and/or copper.
Macmin PNG and the company's joint venture partners have spent approximately $12-million (Australia) on these projects to advance them to their present status. In addition, substantial exploration was completed on these projects by Exxon (Esso) Minerals, (their successors and joint venture partners), prior to Macmin PNG's involvement. Bob McNeil, managing director of Macmin, formulated and managed Exxon's program and the present projects are regarded as some of Exxon's best discoveries in PNG. Prior to Macmin PNG's acquisition of these projects perhaps $30-million (Australia) was spent on the projects and surrounding areas -- Exxon largely withdrew from the minerals industry in the late 1980s.
All of the advanced projects have potential for world-class gold or copper/gold orebodies. PNG is "elephant country" for major orebodies as evidenced by Porgera, Lihir, Misima, Panguna and OK Tedi, has a long history of profitable mining and a substantial period of democratic government subsequent to independence from Australia in 1975.
Macmin PNG has three small, high-grade areas of gold that could be developed immediately, as exploration continues for a major orebody.
The Normanby project (75 per cent Macmin PNG, 25 per cent NGG) including the Imwauna project, has several areas with economic gold intersections in drill hole. Limited exploration at the Imwauna vein swarm, which has multimillion-ounce gold potential, has so far defined a 200,000-ounce gold resource (grade 6.1 grams per tonne gold) with a higher grade, near surface (above 50-metre depth) zone of mineralization estimated at 200,000 tonnes at 10.1 grams per tonne gold. Directors believe this higher-grade zone could be economically mined now and processed by vat leaching. The project requires completion of a feasibility study and also has immediate drill targets. Ultimate potential is one or more multimillion-ounce gold mines.
The Sehulea project (70 per cent Macmin PNG) including the Weioko project, which is adjacent to the Normanby project has high-grade gold at Weioko prospect at surface (16 metres at 20.03 grams per tonne gold). Drilling has not yet targeted this high-grade mineralization at depth, but has defined an open ended five- to 10-million-tonne zone of mineralization averaging approximately one to 1.5 grams per tonne gold, with some higher grade zones. This zone could be extracted by the heap leach process. Geophysics also suggest the mineralization is open ended along strike. The higher grades could be mined and vat or heap leached in conjunction with Normanby mineralization. There are immediate untested induced polarization (IP) based drill targets and ultimate potential is for a multimillion-ounce gold and/or massive sulphide copper/gold mine (at the nearby Gwamogwamo project).
The Sinivit project (90 per cent Macmin PNG) near Rabaul, has a resource of 130,000 ounces of gold including 50,000 ounces extractable by vat leach. The project has a granted mining lease, good access and is already partly developed. The resource is within a 26-kilometre-long vein system which hosts many occurrences of gold/telluride mineralization. It is expected that the gold/telluride mineralization could be sold as a sulphide concentrate. The orebodies are open at depth and the vein system in total has multimillion-ounce gold potential.
Other projects in Papua New Guinea include:
The Crater Mountain project (100 per cent Macmin PNG) eastern Highlands province, has wide gold intersections in drill holes such as 115 metres at 1.83 grams per tonne gold; 24 metres at 6.55 grams per tonne gold, within a 12-square-kilometre highly gold anomalous (plus some lead/zinc anomalism) prospective area. This project is at an early stage, but has similarities to the Porgera mine and could host a world-class resource. There are immediate drill targets.
The Feni project (75 per cent Macmin PNG, 25 per cent NGG) is geologically similar to the Lihir mine. Large volumes of mineralization grading one to two grams per tonne gold have been documented and there is an inferred resource of 450,000 ounces gold. The project has potential for a very large resource but needs extensive further exploration. Geochemical and geophysical targets (IP) are already defined and provide immediate drill targets.
The Simuku (90 per cent Macmin PNG) and Mt. Nakru (100 per cent Macmin PNG) projects are copper/gold properties that occur on the island of New Britain. Simuku is a large, (one billion tonnes plus of 0.3 per cent to 0.35 per cent copper), porphyry copper/gold/molybdenum system. Drilling has defined wide intervals of copper mineralization (277 metres at 0.33 per cent copper; 40 metres at 0.64 per cent copper), a small chalcocite blanket and peripheral zinc and high-grade gold mineralization. Geophysics suggests the system extends well to the north and south of the area drilled. Untested IP anomalies exist and probably not more than 10 to 15 per cent of the area has been explored in any detail. Mt. Nakru has wide intervals of possibly ore grade copper mineralization (74 metres at 0.78 per cent copper), plus significant gold intervals in bulldozer trench (36 metres at 2.54 grams per tonne silver and 245 metres at 0.8 gram per tonne gold). Geological knowledge of the area (and exploration) has been hindered by a blanket of volcanic ash.
Scoping economic studies, with gold at $530 (Australia) per ounce and using vat leach processing, suggest that cash flow over a 3.25-year period of approximately $30-million (Australia) could be generated from the Sinivit, Imwauna and Weioko projects. These figures are after repayment of $10-million (Australia) capital but before interest and tax. These projects are presently on hold until the required capital cost can be raised. The projects represent small parts of large mineralized systems with excellent potential to expand resources, extend mine life and/or increase the scale of operation. Further details are also available at www.macmin.com.au.
