Augustus Minerals has its sights firmly set on elephant country, updating the market on its strategic push into Papua New Guinea (PNG), where it's angling to secure the highly prospective 2.5-million-ounces gold equivalent Mt Kare gold-silver project, a stone’s throw from one of the world’s most significant gold mines.
The company’s subsidiary, ACM PNG, holds a "second-in-time" exploration licence application over the Mt Kare project, positioned a mere 15 kilometres from Barrick Gold’s colossal 32-million-ounce Porgera gold mine.
The geological credentials of Mt Kare are particularly compelling. The project is classed as a rare alkalic-epithermal gold deposit, a geological clan that hosts some of the planet’s most lucrative members such as PNG’s own Lihir mine, with a hefty 47 million gold ounces and the Cadia-Ridgeway system in New South Wales, featuring more than 50 million ounces.
In the past, Mt Kare has thrown up some monster drill hits including 111m at 9.8 grams per tonne (g/t) gold from just 4m and 17.7m at 100g/t gold from 59m, along with a coffee-spitting 20m at 443g/t gold - the sorts of numbers that would get the West Perth mining fraternity leaping out of bed each morning.
Augustus says Mt Kare and Porgera are geological cousins, both sitting within the 2300km-long New Guinea Metallogenic Belt. The company’s modelling suggests Mt Kare may represent a higher-level, less-eroded expression of a much larger, deep-seated gold system, with the world-class Porgera mine representing the deeper root of a similar system.
Notably, the Mt Kare deposit is about 500 metres higher in elevation than Porgera, while historical drilling has only tested to about 350m below the surface, leaving its deeper gold potential largely untested.
First discovered in 1987, the project boasts a rich exploration history and an extraordinary early gold rush. Between 1988 and 1991, an estimated one million ounces of alluvial gold were reportedly recovered from the area by some 3000 artisanal miners, highlighting the sheer richness of the system.
Previous owners have reportedly sunk $60 million into exploration, including 350 diamond holes. Augustus is now leveraging this wealth of information after purchasing all available open-file data from PNG’s Mineral Resources Authority. It has since compiled a full technical memorandum on the project’s history, geology and mineralisation.
While the prize is immense, the path to securing it is complex. The Mt Kare application is contested, with Augustus currently second in line. Crucially, it's not necessarily first in best dressed, with the government having the final say on who secures the coveted exploration licence. Its assessment considers a raft of criteria, including technical expertise, financial capacity, proposed work programs, landowner support and consent and compliance with environmental and statutory requirements. So the company isn't sitting idly by, waiting for a decision from bureaucrats.
Notably, Augustus' executive chairman Brian Rodan, a mining veteran with half a century of industry experience, has some previous form at Mt Kare. He was the managing director of mining contractor ACM PNG when it was awarded a contract in 2012 to do the stage-one underground drilling and all important mine development at the project, ticking several big boxes on the government's wish list.
Ticking a further but equally important box, the company has also been actively building relationships on the ground, a critical component for success in PNG. The company’s management has held numerous meetings with landowner groups and key executives from the Enga and Hela provinces. In a significant show of its commitment to the region, company executives recently attended a People’s Party Foundation Dinner at the invitation of the Enga Provincial Governor, Grand Chief Sir Peter Ipatas, with PNG Prime Minister James Marape as the keynote speaker.
Augustus Minerals executive chairman Brian Rodan said: “The Mt Kare Gold deposit is located 15km from the Porgera gold mine and shares many geological analogies, including roscoelite mineralisation and bonanza gold zones. Augustus has positioned itself as an applicant for Mt Kare through the purchase of ACM PNG, which holds a valid second in time exploration licence application, and thus holds an opportunity to potentially secure future access to the world class Mt Kare gold project.”
The company’s PNG strategy is not a one-trick pony. It also holds an application over the 1900-square-kilometre Vanapa River gold project, sitting just 35km north of Port Moresby and 40km along strike from the 1.5-million-ounce Tolukuma gold mine.
In what could be a savvy bet, multi-billion-dollar gold producer Gold Fields emerged as a 5.33 per cent holder in Augustus in June this year, giving it a seat at the table should Mt Kare be awarded to the company. Its substantial stake also gives the mega miner a foothold in Augustus' Music Well project, which covers a 1345-square-kilometre groundholding in Western Australia.
Music Well sits at the heart of the storied Leonora-Laverton gold belt with a total endowment of more than 28 million ounces. Augustus’ ground abuts tenements held by regional giants Northern Star Resources and Genesis Minerals, alongside other major gold projects in the neighbourhood such as Darlot, King of the Hills and Thunderbox.
The game in PNG is often won long before a drill rig ever turns a rod by demonstrating mining expertise and patient, respectful engagement with the people who own the land. While the geological prize at Mt Kare is tantalisingly big, it is Augustus' groundwork in building political and social capital that may ultimately prove to be its most valuable asset. For the company, this elephant hunt appears to be a carefully choreographed campaign, not just a random shot at the stumps.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
