Kainantu Resources (KRL) - NEW Acquisition Adds 6Moz Gold Equivalent

Kainantu Resources Ltd. is a junior mineral exploration and development company focused on the advancement of its Asia-Pacific assets. The company’s flagship assets are the KRL North and KRL South projects, located in the Kainantu gold district of Papua New Guinea. The projects are located in the proximity of the Kainantu mine of K92 Mining Inc. The Kainantu mine is one of the top 4 highest-grade gold ore bodies in the world and produces 144 Koz of gold per annum at a 17 g/t gold feed grade.

Company Overview

The company recently announced that it had closed the second tranche of its private placement financing offering to raise an aggregate of CAD$ 2.77 million. The offering was originally aimed at raising CAD$ 1.5 million but was upsized due to oversubscriptions.

Kainantu Resources Ltd. also announced that it had successfully completed an Airborne Geophysical Survey over both its KRL North and KRL South projects. The obtained geophysical data, which shows high-grade mineralization similar to that found at the Kainantu mine area, will be implemented in combination with mapping and geochemical sampling data to identify targets for an exploration drilling program at the KRL North project.

The company has also announced that it has entered into a definitive sales agreement with Harmony Gold Exploration Limited, a subsidiary of Harmony Gold Mining Company Limited, to acquire 100% of the Kili Teke project in Papua New Guinea. The Kili Teke project is an advanced stage exploration copper and gold project, which boasts an existing mineral resource of 0.8 Mt of copper, 1.8 Moz of gold and 0.04 Mt of Molybdenum in the inferred category. The project has also seen over 36,000 m of drilling completed to date.

Management

Matthew Salthouse is the CEO of Kainantu Resources Ltd. and is charged with steering the company. Salthouse has more than 25 years of experience in the mining sector and has been intensely involved in the development and operation of various gold mines throughout the Asia Pacific, including the Didipio Gold mine in the Philippines and the Toka Tindung Gold mine in Indonesia. Salthouse is highly experienced in the execution of capital market and corporate development initiatives in the mining sector and has held various senior executive roles in publicly traded mining companies.

Bart Lendrum is the Chief Financial Officer (CFO) of the company and has more than 20 years of experience in the international mining sector. He is highly experienced in the management of publicly traded companies with a particular focus on the Asia Pacific region. Lendrum has held various senior financial management roles including Group Financial Controller of Archipelago Resources plc., a London-based mining & metals company.

Graeme Duncan is the company’s Chief Operating Officer (COO) and has over 45 years of experience as a Mining Engineer. Duncan is highly skilled in mine design, reserve calculation, feasibility studies, bankable documents, independent technical reviews and project valuations. Duncan has held various senior roles in both Coal and Gold mining operations.

Jim Wilkins is the General Manager of Corporate Services for Kainantu Resources Ltd. and brings with him over 25 years of experience as a human resource professional. He has been involved in various industries including mining, oil and gas as well as construction and has held various senior management roles in both Australia and Papua New Guinea.

Graeme Fleming previously served as the company’s Principal Geologist but has recently been involved in various other aspects of the company. Fleming has more than 35 years of experience in the precious and base metals mining industry and has experience in the various mineral development stages of a project including exploration, initial diamond drilling and mine development programs.

Nick Franey has recently joined the company as its Chief Geologist and brings with him more than 40 years of experience in the exploration and development of various mineral operations. Franey has held various senior management positions in companies such as Anglo American Plc and OceanaGold Corporation.

Giuseppe Perone rounds out the management team as the company’s Corporate Secretary. Perone has a background of being a lawyer and has practised as corporate counsel and has also served as an executive and director for various publicly and privately traded companies.

The management team is tasked with advancing the company’s various projects in Papua New Guinea.  

Projects

The company’s asset portfolio consists of the KRL South, KRL North, May River and the newly acquired, Kili Teke projects. The KRL North project of the company is a 129 km2 land package which shares a tenement border with the Kainantu Gold mine, owned by K92 Mining Inc. The Kainantu Gold mine is one of the highest-grade gold ore bodies in the world producing 144 Koz of gold per annum at a 17 g/t gold feed grade. The KRL North project also shows the potential to host buried porphyry systems. The KRL South project of the company is located near the village of Tirokave in Papua New Guinea and lies 30 km southeast of the Kainantu Gold mine. The project hosts various types of gold mineralisation including epithermal vein style systems, skarn deposits and porphyry mineralization. The project has seen over 5,000 samples taken with highlights including 40 g/t of gold. The project further holds copper mineralisation with previous exploration initiatives having intercepted copper hosted in quartz mineralisation.

The May River project of the company is located 15 km from the Frieda River project, owned by PanAust Ltd. The project prospects have shown both gold and copper mineralisation with previous drilling initiatives at the project’s Skiraisa prospect intersecting a 54 m interval at 1.83 g/t of gold as well as 109 m at 1.53 g/t. The project has also shown copper anomalies of more than 2,500 ppm at several areas of its Mountain Gate prospect.

The newly acquired Kili Teke project of the company boasts gold and copper mineralisation at an average grade of 0.34% copper, 0.24 g/t of gold and 168 ppm of molybdenum. The project hosts an estimated 237 million tons of mineralisation and has seen more than 36,000 m of drilling initiatives. The project also has an already developed mine plan as well as near-surface high-grade gold skarn mineralisation that has not been incorporated into the project’s mineral resource estimate. The project also has access to infrastructure in its proximity and is envisioned to be an open-pit mining operation.

Private Placement and allocation

Kainantu Resources Ltd. announced at the start of 2022 that it had concluded with the second tranche of its private placement offering, which led to the gross proceeds of CAD$ 2.77 million for the company. The private placement offering was initially intended to raise gross proceeds of CAD$ 1.5 million, but due to oversubscriptions upsized. The offering consisted of the total issue of 6,118,667 units of the company at CAD$ 0.18 per unit. A unit consisted of one common share of the company and one common share purchase warrant which entitles the holder to purchase one common share of the company at CAD$ 0.36 per share for 36 months after its issue.

The company initially planned to implement the raised fund towards the advancement of its projects to being drill-ready by the second half of 2022, as Matthew Salthouse the CEO of the company explains:

“…originally the intention for that and the remaining intention to that is to deploy that into the existing assets in Kainantu. We look to take them through this year when drill-ready in the second half of this year. So that work is still on track, roughly running to schedule so that's the intention there”

The raised fund will now also be allocated towards the closing of the Kili Teke project acquisition agreement from Harmony Gold Exploration Ltd. The upfront cost of the acquisition is approximately CAD$ 0.5 million.

Kili Teke Acquisition

Kainantu Resources Ltd. announced at the beginning of April 2022 that it had entered into a definitive agreement with Harmony Gold Exploration Ltd., a subsidiary of Harmony Gold Mining Company Ltd. to acquire 100% of the Kili Teke project located in Papua New Guinea.

The agreement entails a total of CAD$ 1 million in cash payments towards Harmony Gold Exploration Ltd. with the first payment of CAD$ 0.5 million on the closing of the acquisition and CAD$ 0.5 million upon regulatory approval. The agreement will further see the issuing of a 1.5% net smelter royalty towards Harmony Gold Exploration Ltd. from any future mine revenue generated as well as the issuing of common shares to the value of a 9.9% interest in Kainantu Resources Ltd. upon closing.

Salthouse explains that the acquisition will enable Kainantu Resources Ltd. to add 6 million ounces of gold equivalent to its asset portfolio.  

“…the upfront payment for Kili Teke is now only CAD$ 0.5 million on closing. And whether we use existing cash resources or further for that in the future, that projects, the key intention here is for the immediate opportunity there, I guess, to close that deal, really for CAD$ 0.5 million upfront, which brings in an equivalent resource of over 6 million ounces of Gold.”

The project has an existing inferred mineral resource of 237 million tons of mineralisation at a grade of 0.34% copper, 0.24 g/t gold and 168 ppm molybdenum. The project also has more than 36,000 m of historical drilling data with additional near-surface and high-grade gold skarn mineralisation not included in the defined mineral resource.

Future Initiatives

Kainantu Resources Ltd. intends to re-analyse the historical drilling data at the Kili Teke project in the coming year which will be aimed at evaluating and if need be optimising the project’s mine plan. Salthouse explains the initiative as follows:

“…re-analyse, reprocess the data, look at it from a different angle, run it through the Whittle model and come up with a re-optimization which is a higher-grade result.”

The company will also conduct infill drilling at the Kili Teke project upon completion of the re-analysing of the historical data. The aim of the company’s exploration and advancement initiatives is the completion of a preliminary economic assessment (PEA) of the project from which it will move into the completion of a feasibility study.

Kainantu Resources Ltd. is also planning to complete a small private placement in the near future. The private placement will enable the company to both acquire the Kili Teke project as well as advance its other projects, Salthouse explains:

“…we're looking at options to do a small private placement at the moment to the original investor consortium from a peer group. I think when we raised the money originally, in December and January, a lot of the shareholders there were aware of that. So we said in Q2 that we'd be looking to do a placement to add to the funds.”

The company further plans on implementing the results of its recently completed airborne geophysical survey over both its KRL North and KRL South projects towards additional exploration initiatives in the coming year. The obtained geophysical data, which shows high-grade mineralization similar to that found at the Kainantu Gold mine area, will be implemented in combination with mapping and geochemical sampling data to identify targets for an exploration drilling program at the KRL North project.

To find out more, go to the Kainantu Resources website