RTG Mining Inc. (ASX:RTG) is the latest company to try and untie the potential of the legendary Mt Kare Gold Project located in the Enga Province of Papua New Guinea.
Mt Kare, located in close proximity to the world class Porgera Gold Project, has long been considered to have the geology to become a major gold producer itself.
The area has been the scene of one of modern times great gold rushes and millions of dollars in investment from mining companies from the around the globe, but no-one yet has been able to crack the project’s geological secrets and its remote location.
Now, little known Australian junior RTG Mining has joined the list of Mt Kare hopefuls by entering into binding Memorandum of Agreement (MOA) with the two priority applicants to acquire a majority 80% stake in the project if and when successful in securing the new exploration licence. The two vendors are GMG Global Mining Group Limited (GMG) and Tribune Mt. Kare Limited (Tribune).
Mt Kare has a Historical Mineral Resource (JORC 2004) of 2.1 million ounces, which includes Measured Mineral Resources of 1.2 million ounces of gold and Indicated and Inferred Mineral Resources of 0.9 million ounces of gold (see next section for details of resource).
The deal terms equate to a purchase price of approximately US$8.80/ ounce of gold in total Historical Mineral Resource with an additional payment of US$2.40/ ounce of gold (in Historical Mineral Resource) based upon a decision a mine.
Mt Kare is located approximately 600km northwest of Port Moresby and 145km west of Mt Hagen in the Enga Province of PNG and is situated 15km southwest of Barrick’s Porgera Gold Mine.
The Porgera Mine is the second largest mine in PNG and is regarded as one of the world’s top ten producing gold mines. It began production in 1990 and to date has produced more than 20Moz of gold.
The Mt Kare Gold Project was discovered in 1987 by Conzinc Riotinto of Australia and has had in excess of A$60 million spent on it by several companies, including 454 diamond holes totalling 73,639 metres. In 2011, Indochine Mining Limited exercised an option to acquire the project and in 2013 announced a Historical (JORC 2004 compliant) Mineral Resource.
The agreed consideration, from RTG to the vendors of an 80% interest in the Mt Kare exploration license (where granted to the consortium of RTG, GMG and Tribune) is subject to satisfaction of a number of conditions precedent (most importantly the grant of the exploration license for Mt Kare to a RTG subsidiary) is set out as follows:
- RTG will provide funding to the proposed grantee of the Mt Kare exploration license of US$1 million once the abovementioned litigation matters are resolved in the PNG Government’s favour, to be utilised by GMG and the joint venture for the grant process for the exploration licence, such as the holding of a Warden’s Hearing;
- US$1.5m in cash and approximately US$11.3m in shares in RTG subject to RTG shareholder approval for the purposes of Listing Rule 7.1, on the grant to an RTG subsidiary of a valid and unchallenged exploration licence for the Mt Kare Project. The shares will be issued based on the 20 day VWAP prior to completion of the transaction (As at 9 December 2019, RTG’s 20 day VWAP was $0.091, however we would anticipate it could be materially different at Completion);
- A contingent payment only if a final decision to mine is made in respect of Mt Kare – approximately US$1 million, with a further consulting fee of US$3m payable if the decision to mine is made by the JV; and
- Approximately US$1m in shares of RTG to Argonaut Equity Partners Pty Ltd, subject to RTG shareholder approval for the purposes of Listing Rule 7.1, which has agreed to assist with any financings (on a non exclusive basis) for the Mt Kare Project on arms’ length terms and conditions. The shares will be issued on the 20 day VWAP prior to completion of the transaction.