VANCOUVER, BC, June 15, 2021 /CNW/ - Kainantu Resources Ltd.
(TSXV: KRL) (FSE: 6J0) ("KRL" or the "Company"), the Asia-Pacific focused gold mining company, is
pleased to announce the execution of definitive agreements to
acquire control of the May River Project (together, the
"Acquisitions") in the world-renowned copper-gold district of
Frieda River, Papua New Guinea ("PNG").
Matthew Salthouse, Chief
Executive Officer commented:
"The May River Project is an exciting acquisition for KRL,
given its location in an exceptionally prospective and proven
district for significant copper-gold projects.
May River will give KRL access to a number of highly
prospective copper-gold prospects in close proximity to the
world-renowned Frieda River Copper-Gold Project.
The deal also demonstrates KRL's ability to execute value
accretive acquisitions, in line with our broader strategy of
developing a portfolio of high-quality gold and copper-gold
projects in the Asia-Pacific
region; and advancing these through the value curve.
The May River acquisitions fits KRL's strategy, and we are
excited to access the ground and advance the existing data. KRL
looks forward to continuing to work with the key stakeholders of
Niuminco and Hardrock in developing both the May River Project and
KRL as an emerging mining company."
Highlights of the Project
- KRL has entered into two definitive agreements to purchase,
indirectly through the acquisition of two holding companies, the
highly prospective copper-gold mineral concessions, known as the
May River Project ("Project") consolidating three adjoining
tenements: see below further details on the Acquisitions under
"Commercial Terms";
- The Project is less than 15km from the PanAust owned
world-renowned Frieda River Project;
- Key Project prospects (Skiraisa, Foya, Eserebe, Mountain Gate
and Iku Hill) are situated along a 7km long N-NW trending
structural corridor, exhibiting many attributes similar to the
extended mineralised system identified at the Frieda River Project
(between 10 and 15km to the east);
-
- Soil, rock chip and channel anomalies indicate the existence of
porphyry style Copper-Gold mineralisation in addition to near
surface structurally controlled and breccia-hosted epithermal gold
veins and berccias;
- Previous drilling at the Skiraisa prospect has demonstrated
significant gold potential: 54m at
1.83g/t Au; 109m at 1.53g/t Au and
96m at 0.89g/t Au;
- Copper-in-soil anomalies of > 2,500ppm have been reported
from several areas at the Mountain Gate prospect;
- At the Iku Hill prospect, airborne geophysical surveys (and
reprocessing of data) have identified intense magnetic targets over
a 2km² area; sharing similar structures to the Frieda River
Project's dominant Horse-Ivaal Cu-Au deposit (less than 10km to the
east);
- The Project is in "good standing" and the consolidation of the
tenements is expected to be well received by local PNG stakeholders
and the National government;
- On closing of the Acquisitions, KRL will take full ownership
and management of the Project;
- The current owners, Niuminco Group Limited ("Niuminco") and
Hardrock Limited ("Hardrock"), through wholly-owned subsidiaries,
will continue collaborating with the Company and will take an
equity interest in KRL (on value accretive terms and pricing for
KRL); and
- These Acquisitions are consistent with KRL's stated corporate
strategy of adding quality regional projects to the Company's
portfolio (building on KRL's current Kainantu projects).
May River Project
Background
The Project is located in the northern foothills of the PNG
Highlands in West Sepik Province, near the Frieda and Sepik rivers;
and approximately 200km from the northern coast. A map of the
Project and location appears in Figure 1.
In aggregate, the Project comprises three tenements over a total
area of 1,697km², as summarised in Figure 2.
Figure 2: May River Project Tenements
Exploration
Licence/Name
|
Size
|
Current
Holder
|
Prospects/Anomalous Areas
|
EL2603 - May
River
|
331km²
|
Hardrock
|
Skiraisa, Foya,
Mountain Gate
|
EL2623 -
Hotmin
|
1272km²
|
Hardrock
|
Various Au-Cu
drainage anomalies
|
EL2527 - Iku
Hill
|
94km²
|
Niuminco (ND)
Ltd.
|
Iku Hill
|
The three tenements were previously contained in one licence:
EL1441 (under control of Niuminco (ND) Ltd, before being separate
into different holdings and owners in 2018/2019. The
Acquisitions by KRL now provide an opportunity to consolidate the
Project; albeit with both agreements being standalone and having
been negotiated separately between KRL and the respective
counterparties.
Niuminco is an Australian company, which has been listed on the
Australian Securities Exchange. Hardrock is a private company
with founders who are highly regarded mining professionals and
active in South-East Asia.
Each of the tenements are currently in "good standing" and the
local community has indicated support for further exploration
activities in the region.
The Project is located adjacent to Frieda River, one of the world's largest
undeveloped copper resources. The district is world
renowned for both porphyry and high-sulphidation epithermal copper
and gold styles of mineralisation trending along the Fiak
Fault.
Geology
The Project is located on an extensive tenement footprint, with
prior holders having conducted exploration and drilling
demonstrating significant copper and gold prospectivity. The
broader regional geology indicates the likelihood of a number of
highly prospective zones across the Project.
Focusing on the southern reaches of the Project in close
proximity to Frieda River (ie:
within 15km), surface anomalies strongly suggest partly outcropping
porphyry copper-gold mineralisation largely concealed beneath
extensive areas of high sulphidation alteration, hosting near
surface epithermal gold systems.
Historic field work, sampling and drilling by prior holders has
identified five highly encouraging prospects: Skiraisa, Foya,
Mountain Gate and Iku Hill noted on Figure 1; in addition to
Eserebe. These are located on a N-NW trending 7km long
corridor splaying off the Fiak Fault and likely to be associated
with the mineralizing events identified at the Frieda River
Project. They display both epithermal and porphyry style
mineralisation, hosted by metamorphics and intermediate intrusive
and volcanic rocks, with large diatreme breccia bodies common to at
least three of them.
Skiraisa: currently, this prospect has an 850x300m area of
anomalous Au-Pb-As-Zn within a larger Zn anomaly of 850x750m.
Thirteen diamond drill holes were drilled by the prior tenement
holders, including:
- 54m at 1.83g/t Au;
- 109m at 1.53g/t Au;
- 96m at 0.89g/t Au; and
- 6m at 6.8g/t Au at surface.
Some of the holes terminated in strong mineralisation.
Foya: this prospect has a current area of 150m x 150m of
anomalous Au-Ag-Pb, within a larger 1,000m x 200m Ag
anomaly.
Eserebe: this prospect, in close proximity to Mountain
Gate, displays a 400m x 400m coincident Cu-Au-Ag-Pb-Zn-in soil anomaly
open to the east, north, and west. It has not yet been drilled.
Mountain Gate: this prospect is highly prospective in terms of
copper-gold potential; with a coincident Cu-Au-Ag-As-Pb-Zn-in-soil
anomaly, which is approximately 900x700m centred on a double peaked
topographic high. Cu-in-soil samples of >2,500ppm have
been reported in several areas across the larger anomaly, with
anomalous Au-in-soil (from 0.1 to >0.5ppm) reported from an area
of 500x400m. The size and nature of the soil geochemical signature
along with context of this prospect suggests an outcropping gold
rich porphyry copper body, with tropical weathering and surface
leaching of copper apparent. At this stage, the prospect has
not been drill tested.
Iku Hill: reprocessed airborne magnetic survey data from this
prospect by prior holders identified an intense magnetic target,
defined over a 2km² area in diameter, of similar magnitude and
intensity as the Horse-Ivaal anomaly (one of the Frieda River
Project's dominant copper-gold deposits): see Figure 3. Iku
Hill also demonstrates similar E-NE and NW intersecting lineaments
and intrusion orientations as observed at Horse-Ivaal.
The intense magnetic anomaly, which is haloed by a series of
VTEM anomalies at Iku Hill is extremely encouraging, as porphyry
copper-gold systems commonly have a concentrated halo of sulphides
with high metal grades around the edges of the host intrusive
bodies (as is the case at Horse-Ivaal).
Commercial terms
KRL expects to consolidate the Project tenements in
collaboration with the current owners, having executed two separate
definitive agreements with Niuminco and Hardrock to acquire the
respective PNG holding companies, which currently own and control
the tenements. KRL is at arm's length to both Numinco and
Hardrock, and their respective affiliates and
shareholders.
In combination and on closing both Acquisitions, KRL will
control the Project and the upside potential to develop these
highly prospective copper-gold prospects; and the stakeholders of
Niuminco and Hardrock will take equity positions in KRL and remain
active in supporting KRL.
Definitive Agreement with Niuminco
KRL and its related entities have entered into a definitive
agreement with Niuminco and its related entities (the "Niuminco
Acquisition") whereby KRL will acquire the outstanding shares of
Niuminco (which holds EL2527) and all historic data in respect of
the Project, in exchange for (i) payment of A$250,000 and (ii) issuance by KRL of its common
shares equal to A$250,000 in total
value based on a 14-day volume weighted average trading price prior
to closing (and subject to the rules of the TSX-V).
A$250,000 is equivalent to
approximately C$234,000 as at
June 14, 2021, based on the
Australian/Canadian $ exchange rate published by
Bloomberg.
Closing of the Niuminco Acquisition is subject to a number of
conditions precedent, including:
- KRL completing corporate and project level due diligence;
- KRL being satisfied as to the "good standing" of EL2527;
- receipt of all necessary regulatory and third-party approvals
in Canada, Australia and PNG, including approval of the
TSXV, if necessary; and
- such other terms as are customary for transactions of this
nature.
A sunset date of August 31, 2021
has been agreed for closing and satisfaction of conditions
precedent.
Definitive Agreement with Hardrock
KRL and its related entities have entered into a definitive
option agreement with Hardrock and its shareholders (the "Hardrock
Agreement") to acquire Hardrock (which holds EL2603 and EL2623) by
way of a series of option arrangements. Specifically, the
parties have agreed the following (subject to TSX-V approval where
applicable):
- KRL will, at its expense, complete a field study and sampling
programme at May River (the "Study") to increase confidence and
understanding of the Project;
- on completion of the Study, KRL may exercise a first option
("First Option") and elect to acquire a 10% equity interest in
Hardrock by way of a share subscription (for no further
consideration beyond the "in-kind" expenditure incurred to complete
the Study);
- on completion of the First Option, KRL will act as operator of
the tenements held by Hardrock;
- on completion of further exploration, valuations and
satisfaction of certain conditions precedent (including obtaining
all necessary regulatory approvals in Canada and PNG, including from the TSXV), KRL
may exercise a second option ("Second Option") to purchase the
remaining 90% of Hardrock by way of acquisition from the Hardrock
shareholders of the remaining outstanding shares of Hardrock for
consideration;
- equal to 90% of the fair value of Hardrock, as determined by an
independent valuation and accepted by KRL, the consideration
payable by KRL will be settled by way of the issuance of KRL shares
equal to such valuation (determined by reference to the 14-day VWAP
of KRL shares prior to closing, less a payment of Kina 600,000 (approximately C$200,000));
- 80% of the KRL share consideration will be issued to Hardrock
shareholders on closing, with the remaining 20% representing
deferred consideration (and only issued on KRL announcing a JORC
compliant resource; and
- Certain protections in favour of (i) KRL in the event of
closing being delayed for reasons beyond KRL's control; and (ii)
Hardrock where 9 months has passed after KRL exercises the first
option to acquire the initial 10% of Hardrock.
KRL anticipates the independent valuation to be obtained for
exercise of the Second Option to be for an amount not exceeding
other recent transactions in the sector in PNG, taking into account
comparable per hectare values (including KRL's internal valuation
determined in respect of the transfer of KRL's assets from Pacific
Energy Consulting Limited prior to KRL's reverse take-over
transaction in December 2020).
Closing of the Hardrock Acquisition under the Second Option is
subject to a number of conditions precedent, including:
- KRL completing corporate and project level due diligence;
- KRL being satisfied as to the "good standing" of the tenements
held by Hardrock;
- receipt of all necessary regulatory and third party approvals
in Canada, Australia and PNG, including approval of the
TSX-V; and
- such other terms as are customary for transactions of this
nature.
Closing of the exercise of the Second Option under the Hardrock
Agreement is expected to occur on or before the date that is six
months following exercise of the First Option.
Next Steps
KRL will continue to work co-operatively with the management of
both Niuminco and Hardrock (and key stakeholders in PNG) to move to
obtain all necessary regulatory approvals for the Acquisitions for
completion and consolidate the Project. KRL is currently
conducting the field work necessary for the Study under the
Hardrock Agreement. Initial field work appears positive and
KRL will update shareholders on Study findings in due
course.
Qualified Person
The scientific and technical information disclosed in this
release has been reviewed and approved by Graeme Fleming, B. App. Sc., MAIG, an
independent "qualified person" as defined under National Instrument
43-101, Standards of Disclosure for Mineral Projects.
About KRL
KRL is an Asia-Pacific focused
gold mining company with two highly prospective gold projects, KRL
South and KRL North, in a premier mining region, the high-grade
Kainantu Gold District of PNG. Both of KRL's projects show
potential to host high-grade epithermal and porphyry
mineralisation, as seen elsewhere in the district. KRL has a highly
experienced board and management team with a proven track record of
working together in the region; and an established in-country
partner.
For further information please visit
https://kainanturesources.com/
Neither the TSX-V nor its Regulation Services Provider (as
that term is defined in the policies of the TSX-V) accepts
responsibility for the adequacy or accuracy of this
release.
Disclaimer and Forward-Looking Information
Mineralization hosted on adjacent and/or nearby properties is
not necessarily indicative of mineralization hosted on the
Company's property. The data disclosed in this release relating to
drilling results is historical in nature. Neither the Company nor a
qualified person has yet verified this data and therefore investors
should not place undue reliance on such data, and no representation
or warranty, express or implied, is made by the Company, its
affiliated companies, or any other person as to its fairness,
accuracy, completeness, or correctness. This release
contains forward-looking statements, which relate to future events
or future performance and reflect management's current expectations
and assumptions. Such forward-looking statements reflect
management's current beliefs and are based on assumptions made by
and information currently available to the Company. All statements,
other than statements of historical fact, are forward-looking
statements or information. Forward-looking statements or
information in this news release relate to, among other things:
expectations regarding completion of the Acquisitions, including
timing, the results of the Study and further exploration activities
on the Project, the valuation of Hardrock, receipt of necessary
regulatory approvals and the formulation of plans for drill
testing; and the success related to any future exploration or
development programs. These forward-looking statements and
information reflect the Company's current views with respect to
future events and are necessarily based upon a number of
assumptions that, while considered reasonable by the Company, are
inherently subject to significant operational, business, economic
and regulatory uncertainties and contingencies. These assumptions
include; success of the Company's projects; prices for gold
remaining as estimated; currency exchange rates remaining as
estimated; availability of funds for the Company's projects;
capital, decommissioning and reclamation estimates; prices for
energy inputs, labour, materials, supplies and services (including
transportation); no labour-related disruptions; no unplanned delays
or interruptions in scheduled construction and production; all
necessary permits, licenses and regulatory approvals are received
in a timely manner; and the ability to comply with environmental,
health and safety laws. The foregoing list of assumptions is not
exhaustive. The Company cautions the reader that
forward-looking statements and information involve known and
unknown risks, uncertainties and other factors that may cause
actual results and developments to differ materially from those
expressed or implied by such forward-looking statements or
information contained in this news release and the Company has made
assumptions and estimates based on or related to many of these
factors. Such factors include, without limitation: fluctuations in
gold prices; fluctuations in prices for energy inputs, labour,
materials, supplies and services (including transportation);
fluctuations in currency markets (such as the Canadian dollar
versus the U.S. dollar); operational risks and hazards inherent
with the business of mineral exploration; inadequate insurance, or
inability to obtain insurance, to cover these risks and hazards;
our ability to obtain all necessary permits, licenses and
regulatory approvals in a timely manner; changes in laws,
regulations and government practices, including environmental,
export and import laws and regulations; legal restrictions relating
to mineral exploration; increased competition in the mining
industry for equipment and qualified personnel; the availability of
additional capital; title matters and the additional risks
identified in our filings with Canadian securities regulators on
SEDAR in Canada (available at
www.sedar.com). Although the Company has attempted to identify
important factors that could cause actual results to differ
materially, there may be other factors that cause results not to be
as anticipated, estimated, described, or intended. Investors are
cautioned against undue reliance on forward-looking statements or
information. These forward-looking statements are made as of the
date hereof and, except as required under applicable securities
legislation, the Company does not assume any obligation to update
or revise them to reflect new events or circumstances.
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SOURCE Kainantu Resources Ltd.