By Brian Gomez

PORT MORESBY, Papua New Guinea (The National, Nov. 25) – Canadian exploration and mining company New Guinea Gold has given its vote of confidence to new government policies in PNG by entering into a joint venture to acquire five significant gold exploration properties.

It has joined forces with Canada's Vangold Resources Ltd, a company that knows PNG well, to take over a private PNG company, Kanon Resources Ltd, on a 50:50 basis.

Under the deal, which has yet to formally ratified by the various parties and the government, NGG and Vangold are reviewing historical data on the properties to plan future exploration.

NGG and Vangold will each immediately pay A$35,000 as a partial reimbursement of costs incurred by Kanon with a further payment of A$35,000 each on completion of regulatory approvals.

They have also agreed to issue 1.5 million shares in NGG and Vangold with half the amount escrowed for 12 months and the remainder for 24 months.

The vendors will also be granted a two per cent gross royalty on each property but NGG and Vangold can buy back one per cent of the royalty at any time with a one time payment of US$1 million.

"At this point in time our initial conclusions are that the partners will explore/develop three of the properties," according to NGG's chairman and chief executive, R.D. McNeil.

Mr McNeil said partners will be sought for two other properties.

He said NGG believed the Mt Penck property best complemented its existing properties in PNG and NGG had the right within 60 days to proceed to take an effective 60 per cent interest in this property.

Some 43 holes have been drilled in the 101 sq km Mt Penck site with the best intersections including 18m at an average of 4.35 grams of gold a tonne, 37.7m @ 1.7 g/t, 6m @ 6.1 g/t and 33m at 2.41 g/t.

Vangold has a reciprocal right to choose within 60 days, if it so desires, to proceed to a 60 per cent interest in one of the remaining properties - Fergusson, Mt Allemata, Bismarck and Yup River. 

No drilling has yet occurred on the 379 sq km Yup River prospect, where several very large gold anomalous zones of more than 20 sq km each, have been outlined.

In his statement Mr McNeil said: "The company believes that the investment community is entering a bull market phase in the resource sector and it is therefore incumbent on management to position itself favourably in highly prospective properties when the opportunity presents itself, especially in geographical locations where management and personnel are already acknowledged experts."

Seventy five holes have been completed at the 475 sq km Fergusson prospect with the best holes assaying 3m at 20.8 g/t, 3m @ 19.8 g/t, 1m @ 64 g/t and 14.5m @ 4.18 g/t.

Similarly attractive results were also recorded at Mt Allemata, where only 14 holes have been drilled, and at Bismarck, where nine holes have been completed.

November 26, 2003

The National:


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