PNG Government buys into Woodlark Island gold project

THE BOURSE WHISPERER: Kula Gold (ASX: KGD) has received confirmation from the Government of Papua New Guinea regarding the State’s equity participation in the development of the company’s Woodlark Island gold project.

Kula Gold said the PNG Government’s decision to acquire a five per cent participating interest in the Woodlark Island project is evidence of the strong support it is receiving from the Government and local communities for the development of the gold mining operation.

The company explained that, in accordance with the conditions of all exploration licences issued under the current Mining Act, the State has the option to acquire a participating interest of up to 30 per cent by the payment of sunk costs and contributing to construction capital costs on a basis pro rata to the percentage of the project acquired.

The Government of Papua New Guinea has exercised this option to acquire only a 5 per cent interest in the project, which will be shared between the local landowners and the Milne Bay Provincial Government.

The PNG Government is expected to fund this acquisition and has also indicated potential interest in a further acquisition of up to 25 per cent on commercial terms through the State’s nominee, Petromin PNG Holdings Limited.

Kula indicated terms of any acquisition of a participating interest by Petromin will need to be negotiated at that time.

Kula also said that it would be willing to consider this if it facilitates early development of the project.

The State’s equity participation the Woodlark Island gold project follows the completion of other milestones towards production, which include: a Definitive Feasibility Study; Environmental approval and Permit granted; and a Mining Lease granted.

“We are very pleased to have received confirmation of the PNG Government’s participation in the development of the Woodlark Island gold project,” Kula Gold CEO Stuart Pether said in the company’s announcement to the Australian Securities Exchange.

“The State equity commitment is further indication of the robust support we are receiving from not only the PNG Government, but the local communities for the continued development of the project.

“This milestone follows on from the granting of the Mining Lease for the project in July.

“We look forward to updating our shareholders with further news flow in due course.”