Kainantu Resources Ltd (TSXV: KRL) has entered into a definitive agreement with Harmony Gold (PNG) Exploration Limited (HGEL) to acquire 100% ownership of the Kili Teke Gold-Copper Project in Papua New Guinea (PNG).
Kili Teke is a significant advanced exploration porphyry gold-copper project with an existing mineral resource, and potential for further re-optimisation and discoveries to increase overall value.
Highlights:
- KRL to acquire 100% of the Kili Teke project from HGEL:
- advanced exploration Au-Cu project in premier region of PNG;
- has an existing defined Inferred Mineral Resource of 237Mt @ 0.34% Cu (=0.8Mt Cu), 0.24g/t Au (=1.8Moz Au) and 168ppm Mo (=0.04Mt Mo), with an effective date of 30 June 2021;
- over 36,000m of drilling completed to date;
- significant exploration resource upside, with near surface, high-grade Au skarn mineralisation not yet included in the defined Mineral Resource;
- potential for re-optimisation, bringing Kili Teke significantly closer to production as an open-pit mine to increase economic returns;
Terms of Agreement:
- initial cash consideration of US$1 million, payable in two instalments: US$500,000 on closing (targeted for May 31, 2022); and US$500,000 on receipt of post-closing regulatory approvals (expected in late 2022 or early 2023);
- KRL intends to work towards a Preliminary Economic Assessment (“PEA”), then a Feasibility Study. If KRL views the Project positively at each step, KRL to make further payments to HGEL of US$3 million and US$4 million respectively;
- KRL to pay HGEL a 1.5% net smelter royalty from future mine revenue;
- potential for Harmony to become a strategic investor in KRL under the Transaction, with HGEL to be issued warrants equal to 9.9% of the issued share capital of KRL on closing (with each warrant exercisable at C$0.28 per share or a 25% premium to the KRL 30-day VWAP to April 5, 2022).
“We are delighted to announce the acquisition of Kili Teke which aligns with our strategy of building shareholder returns by executing value accretive acquisitions. In this regard, our extensive due diligence indicates Kili Teke will be a transformative and accretive acquisition for KRL and will elevate our asset portfolio, adding an established gold copper resource which has potential for significant growth,” Kainantu CEO, Matthew Salthouse, said.
“The Project lies on the highly prospective Papuan Fold Belt which hosts world class projects, such as Ok Tedi, Frieda River and Porgera. We look forward to exploring and developing another potential world class project for the region.
“This transaction moves KRL from a greenfield high potential explorer into being a resource development company with upside. For a junior to achieve this after a year of listing is a testament to the team’s vision on growing KRL via accretive transactions in combination with on-going field work.
“HGEL has already made excellent progress to date in developing the Project, delineating an impressive copper gold resource of 800Kt copper and 1.8Moz gold; with the deposit remaining open to the southeast and down depth. Through the grant of warrants to acquire equity in KRL of up to 9.9%, HGEL has an option to engage further.
“KRL will continue to deliver on our strategic objectives with Kili Teke a key catalyst in driving shareholder value as we develop as an Asia Pacific gold-copper mining company.”
Definitive Agreement
KRL and HGEL have executed a definitive agreement for KRL to purchase Kili Teke by way of an asset acquisition. The acquisition is inclusive of the transfer of the Exploration Licence 2310 (EL 2310) and all associated assets and know-how, such as drill core, logs and data used to support the Mineral Resource.
The Project comprises of EL 2310 and is located approximately 40km west-northwest of the Porgera Gold Mine, in the Koroba-Kopiago District of Hela Province, PNG. EL 2310 was granted to HGEL in May 2014 and has been renewed three times. The EL remains in good standing and is currently subject to a further renewal application at the end of the current term in May 2022. Pending renewal, the EL remains on foot with KRL entitled to continue to explore the project as is customary under PNG mining law.
An Inferred Mineral Resource of 237Mt @ 0.34% Cu (=0.8Mt Cu), 0.24g/t Au (=1.8Moz Au) and 168ppm Mo (=0.04Mt Mo), with an effective date of 30 June 2021 has been established by Harmony for the Project in accordance with the South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves (SAMREC, 2016 Edition), which is recognised and accepted for the purposes of National Instrument 43-101, Standards of Disclosure for Mineral projects (NI 43-101). As part of the Transaction, KRL intends to file with applicable Canadian securities regulators and the TSXV, within 45 days of this news release, an NI 43-101 compliant technical report in respect of the project.
In developing the Project, HGEL drilled 54 holes (for 36,325m), at an estimated cost of US$20 million. With multiple work streams ongoing in PNG, Harmony has taken a strategic decision to sell the Project to KRL as a credible junior explorer to allow exploration on the project to continue with a dedicated focus.
For further information please visit: https://www.kainanturesources.com/
