THE BOURSE WHISPERER: Highlands Pacific has been advised by Xstrata Copper that the latter is set to exercise its US$10.8 million option over the high‐grade Nena copper/gold deposit in Papua New Guinea and include it in the Frieda River copper/gold project joint venture.
Highlands said it expects to receive the proceeds in the coming month, which will provide a healthy boost to its bank balance increasing it to approximately US$17m.
Until now the 51 million tonnes at 2.4 per cent copper Nena deposit has remained outside the Frieda River copper/gold joint venture.
The option dates back to a 2002 agreement between Highlands and Noranda, which was subsequently acquired by the Xstrata group.
By exercising this option, Xstrata Copper will hold 81.82 per cent interest (with Highlands 18.18 per cent interest) in the entire Frieda River project area inclusive of the major copper porphyry deposits such as Horse, Ivaal, Trukia and Koki and a number of other prospects within the Exploration Licence.
“Xstrata Copper exercising this option further demonstrates their belief in the potential of the Frieda River project,” Highlands pacific managing director John Gooding said in the company’s announcement to the Australian Securities Exchange.
“This will take their project spend to date to over US$270m, and with the finalisation of the feasibility study this December, the total project spend will be approximately US$290m.”
“Including Nena, the Frieda River joint venture has a truly world class resource inventory of almost 11.6 million tonnes (25.6 billion pounds) of contained copper, 18.2 million ounces of gold and 49 million ounces of silver.
Highland’s 18.8 per cent share of this at 2.1 million tonnes (4.6 billion pounds) of contained copper, 3.3 million ounces of gold and 8.9 million ounces of silver is a significant endowment for a junior company and we have the benefit also that much of this inventory is in the highest resource confidence levels.”
Xstrata Copper is currently completing a Feasibility Study, which is required to be completed by 21 December 2012.
Highlands has been ‘free carried’ by Xstrata Copper through to 23 January 2012 (today), and will now be carried, under a carried funding loan arrangement, through to the lodgement of a Special Mining Lease application for the project.