INDOCHINE logging drill core at Mt Kare in Papua New Guinea. The company signed a “groundbreaking” land agreement with local landholders this week, ahead of a recapitalisation of the company, according to insiders. Photo: Indochine Mining

INDOCHINE logging drill core at Mt Kare in Papua New Guinea. The company signed a “groundbreaking” land agreement with local landholders this week, ahead of a recapitalisation of the company, according to insiders. Photo: Indochine Mining

Indochine Makes Breakthrough
at Mt Kare in PNG

Issue 103, October 2014

ASX-listed Indochine Mining is set to announce a financial recapitalisation of the company before the end of the year, Global Mining Observer has learned, after securing a breakthrough land deal with local tribes this week at its Mt Kare gold project in Papua New Guinea.

In a ceremony marked by “singsing” and “pig killing”, Indochine ended a 30-year land ownership dispute with local tribes on Tuesday. The news is seen internally as a “groundbreaking” moment in securing the future of Mt Kare, a bonanza grade gold asset in the politically volatile world of Papua New Guinea.

In conjunction with an equity raising, the company is working on a debt-to-equity swap with its secured creditor, according to sources involved, pumping money into the company, removing its debt overhang and kickstarting mine construction.

Indochine announced a boardroom overhaul in July, thought to have had the backing of underground mine contractor Brian Rodan, the company’s largest shareholder.

Valued at A$23m ($20m), or A$1.9c per share, the market appears to be pricing the company for liquidation, but in response to questions this week, interim chairman and restructure specialist Dermott McVeigh said he is “extremely confident that we’ll be here in not just 18 months, but that we will develop this project.”

The company has had expressions of interest for the full acquisition of the asset, according to McVeigh, but Indochine is “exactly the vehicle” to develop Mt Kare, he said. “The main reason I say that is because of the approach the company has taken to our relationship with landowners. On the ground in PNG, it makes an enormous difference.”

Mt Kare sits along trend from Barrick Gold’s giant Porgera mine, yielding 17m gold ounces since opening in 1990. The mine produced 482,000 ounces last year, but Barrick recently downgraded its mine life from 13 to 9 years and is trying to offload the asset, according to sources. 

“On the ground in PNG, it makes an enormous difference.”

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