INDOCHINE’s country manager, George Niumataiwalu, at Mt Kare in Papua New Guinea. In January, Indochine completed a land boundary walk with local clans ahead of a mining lease application in August. Credit: Indochine Mining

INDOCHINE’s country manager, George Niumataiwalu, at Mt Kare in Papua New Guinea. In January, Indochine completed a land boundary walk with local clans ahead of a mining lease application in August. Credit: Indochine Mining

Indochine Close to Financing Deal for Mt Kare

Issue 74, February 2014

Indochine Mining is close to finalising a funding deal to accelerate drilling at its ultra high grade Mt Kare gold project in Papua New Guinea, insiders involved in the agreement told Global Mining Observer this week.

The company is currently driving an access tunnel into the core of its Mt Kare deposit, aimed at defining a high grade core of over 1m gold ounces at above 10 grams per tonne, within its existing 2.1m ounce gold resource.

Indochine estimates that underground access will cut drill costs by nine tenths, obviating helicopters, allowing larger rigs with “greater grunt” and non-stop drilling in a controlled environment. The tunnel will also allow bulk samples to measure grade variance and generate early cash flow on receipt of a mining license, whilst stripping out the cost of a mining shaft on production in 2015, chief executive Stephen Promnitz recently told investors in London.

By boring a tunnel into the high grade core however, Indochine has more directly pitted itself in a race against time than had it continued with surface drilling. As of a January filing, the company has A$492,000 in its treasury, but does not expect to puncture the deposit’s central zone before April.

The bold move would be vindicated by any financing deal that lifts funding uncertainty from the stock, carrying Indochine through to Mt Kare’s core, where average gold grades range between 10 and 20 grams per tonne.

The deposit is seen as a geological lookalike of the nearby Porgera deposit owned by Barrick Gold. Like Mt Kare, Porgera has moved from an unlicensed panning free-for-all to a high grade starter core mined from an underground adit. Porgera has since broadened into one of the world’s largest open-pit gold mines, producing 17m gold ounces to date, with a further 6.2m ounces in gold reserves.

Indochine’s chief geologist Anthony Burgess is credited with adding 9m ounces to Porgera’s reserve base under its ownership by Placer Dome, bought by Barrick in 2006 for $9bn. This week, as part of its transition to mining from exploration, Indochine also appointed engineer Craig Dawson to its board, former general manager at ASX-listed success story Sandfire Resources.

Shares in Indochine last traded at 6 Australian cents, valuing the company at A$57m ($51m).

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