High stakes and blue sky as Augustus lines up for PNG golden prize

There’s a big play happening up in PNG with a potentially huge prize and the $10m ASX listed Augustus Minerals is in the thick of it.

After years of dispute, court cases and controversy, the gold-rich Mt Kare project, that sits about 600kms north-west of Port Moresby, is about to be awarded to someone by the Papua New Guinea Government’s Mineral Resources Authority, or “MRA”.

The project has a long and arduous history that reads like a bit of a soap opera.

Originally discovered by CRA, now Rio Tinto, a million ounces of alluvial gold was rumoured to have been pulled out of it just via illegal mining in the late eighties and early nineties.

For the next two decades it was explored with great success by multiple parties, however historic landowner issues forced its owner into administration in 2008 when the project was subsequently awarded to PNG local company Summit.

Fast forward to 2011 and Summit was taken out by ASX listed company Indochine.

By 2015 some $125m had been spent on the ground and at that time, Indochine set tongues wagging at the Diggers and Dealers conference in Kalgoorlie when it revealed the stellar resource at the project. That resource was 42.5m tonnes going 1.54 g/t gold and 13.5 g/t silver for a whopping 2.11m ounces of gold and a further 18.4m ounces of silver. Put a little differently, Indochine said at the time it was sitting on 2.45m gold equivalent ounces at Mt Kare and there is no evidence that any of that has been mined to this day.

By early 2015, Indochine was in some financial troubles that were exacerbated when the PNG Government refused to renew its leases for Mt Kare towards the end of that year. Indochine sought a court ruling to overturn that decision in 2018, lost that battle and saddled up again for an appeal which was thrown out again in 2021.

That final court resolution attracted applications from a flood of hopefuls, all seeking to land the grand prize of the Mt Kare leases. Since then, the PNG MRA has been working its way through them, looking for a party with both money and mining expertise to hand it to.

It is dealing with each application in the order in which it was lodged and has already summarily dismissed the first in line. It is now onto hopeful No 2, a private company by the name of Tribune Mt Kare Gold Ltd.

If Tribune can’t meet the high money and expertise bar being set by the MRA, ASX listed Augustus Minerals, run by Perth mining man Brian Rodan and James Warren - who has a PHD in Geology no less - is next in line for the 2.45m ounce gold equivalent prize - and that’s where things start to get interesting.

Rodan might as well have a mining tattoo stamped on his forehead. He was one of a handful of people who originally set up massive mining contractor Eltin Mining many years ago. Eltin, which was domiciled in Kalgoorlie, ruled the Australian mining scene for decades around the late 1990’s early 2000’s. Rodan then went on to build large mining contractor ACM which he subsequently sold for tens of millions of dollars.

Since that time he has founded, invested in and still continues to control multiple ASX-listed exploration companies. He has been the driving force behind capital raises for all of them totalling in the many millions of dollars over time.

Curiously, Rodan - who has been in the mining game for half a century – has some form at Mt Kare. He was the managing director of mining contractor ACM PNG when it was awarded a contract back in 2012 to do the stage 1 underground drilling and mine development at the project. For various reasons that contract never went ahead and to this day the project remains unmined, however at the time Rodan provided his expertise to create the mine design and he worked out what equipment was necessary to mine it and even mobilised that equipment to site. So unlike some of the other hopefuls shaking their tail feathers at PNG’s MRA, Rodan has been down and dirty with this project before. 

By any measure Mt Kare sits in the land of the giants. It is about 15 kilometres southwest of Barrick’s world-class Porgera mine, which boasts a massive endowment of over 32 million ounces of gold. Further north again is the revered Ok Tedi with its 16m ounces of gold and 11 billion pounds of copper. To the south-east of Mt Kare is Newmont/Harmony’s crazy Wafi Golpu site, host to 22 billion pounds of copper and 23m ounces of gold.

Geologically Mt Kare is an Alkalic Epithermal deposit. Alkalic type deposits are a subset of low-sulphidation epithermal deposits and form some of the mega mineral deposits around the world. Their drill results are like eye-candy to a geologist and Mt Kare is no exception. In the past, Mt Kare has thrown up coffee-spitting drill hits like 111m at 9.8 grams per tonne gold from just 4m and 17.7m at 100 g/t gold from 59m - or maybe try 20m at 443 grams per tonne gold for size! Those sort of numbers would have the West Perth mining glitterati leaping out of bed every day.

Augustus Minerals CEO James Warren said recently; “If we’re successful in securing this ground, it would position Augustus at the doorstep of world-class geology and give shareholders exposure to a project with genuine scale potential.”

For now however, Augustus’ official language on Mt Kare remains measured, as it should. “Quietly confident” is about as strong as it gets.

And while the PNG story provides the blue-sky narrative, Augustus is far from idle on home soil. The company is already advancing on multiple fronts across its West Australian portfolio, most notably the Music Well gold project which sits about 35 kilometres north of Leonora where early fieldwork has delivered results strong enough to lift eyebrows across the gold belt.

The company has completed more than a thousand surface-geochemistry samples and unearthed visible gold in quartz veins grading as high as two ounces to the tonne from the St Patricks prospect.

The maiden drill program will test undercover extensions at the Clifton East, Dodd’s, St Patricks and Black Cat prospects, all of which Augustus has ranked as high-priority greenfield targets.

Providing another string to the bow, the company also retains the Ti-Tree Project in the Gascoyne region of WA - a 1,700-square-kilometre package prospective for copper, gold, lithium, uranium and rare earths. While not the current focus, the Gascoyne ground adds a critical-minerals dimension that could gain traction as the company’s gold projects mature.

For now though, the big blue sky for Augustus comes in the form of Mt Kare. The PNG Government is looking for someone that has mining expertise and the ability to raise money to run it and whilst the credentials of the first hopeful in line, little known private company Tribune, are uncertain, Augustus has plenty of both.

And who knows, maybe no 1 and no 2 will join forces. Augustus could bring its public listing, money raising ability and mining expertise to the table and Tribune could bring its No 1 ticket holder status. And with 2.45m ounces of gold equivalent already discovered, it looks like there’s going to be plenty to go around.

Watch this space.

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au