On the hunt for New Guinea gold

JUNIOR explorer Goldminex Resources is hoping it has the Midas touch to turn its prospects within the jungles of Papua New Guinea into world-class moneymakers. By Imelda Cotton - RESOURCESTOCKS*
On the hunt for New Guinea gold
On the hunt for New Guinea gold
On the hunt for New Guinea gold
On the hunt for New Guinea gold
On the hunt for New Guinea gold

A unique tectonic environment, positioned across 6700 square kilometres of underexplored land within PNG's Owen Stanley Ranges, is providing gold and base metals explorer Goldminex with what it believes is the ideal scenario for the development of its first gold-copper projects.

Since listing on the Australian Securities Exchange in October 2007 and weathering an unsteady period two years later on the back of uninspiring drill results, the Melbourne-based junior has refocused itself in the search for a 2 million ounce gold or equivalent base metals deposit that will propel it into the league of mid-tier producers.

Goldminex chief executive officer Sandy Moyle told RESOURCESTOCKS the exercise should not be difficult with the odds stacked in the company's favour.

"On a minerals fertility scale, PNG ranks amongst the world's most prospective countries," he said.

"Geologically, the country's tectonic settings are ideal, with highly-active subduction and obduction zones giving rise to unusually-rich concentrations of gold and copper mineralisation. "

The tenements Goldminex is exploring are situated in the region of the Owen Stanley Ranges and the Sepik province, within a tectonic thrust zone extending the length of mainland PNG through to the island of Misima, along the collision zone between the Pacific and Indo-Australian plates.

The zone hosts some of the world's great ore bodies such as Grasberg (mined by Freeport-Rio Tinto), Ok Tedi (Ok Tedi Mining), Porgera (Barrick Gold), Wafi and Hidden Valley (Harmony-Newcrest).

"We are naturally very enthusiastic about having a landholding in this region," Moyle said.

"PNG is considered highly-prospective and is still relatively underexplored compared to other parts of the world. It has a relatively stable political environment operating under the Westminster-style government, and has well-developed mining laws and a mature minerals industry sector.

"When you combine that with an experienced geological team with proven PNG exploration and development expertise, together with our support infrastructure, I believe we have good reason to feel confident of making a large, world-class discovery."

Moyle's optimism has been hard-won on the back of disappointing 2009 drilling results from a number of prospects heavily promoted during 2007 and 2008 by the company's previous management team.

This shaved about $10 million off Goldminex's market capitalisation and saw it downgraded by several industry analysts.

"Our current management team has the attitude of not building expectations unless exploration results indicate that there is a good chance of delivering, and this has been received positively by the market with a shift in shareholder confidence," Moyle said.

"On a positive note, we have managed to retain the majority of our Top ten investors, who hold close to 80 per cent of our stock."

Central to this mindset was the pursuit of larger-scale, economic magmatic or porphyry-related targets, rather than small shear or vein-hosted mineralisation.

A subsequent project ranking with this philosophy led to the Liamu project becoming the company's highest priority.

Historically, Liamu has supported small-scale alluvial gold mining but Moyle said all indicators pointed to a much larger prize for the taking.

Rapid advancement of the project since the beginning of 2010 has identified several drill targets within areas of higher grade gold mineralisation overprinting broad zones of porphyry copper-gold mineralisation.

During the June quarter, a diamond drilling program commenced at the Berefana prospect. Trenching has already produced encouraging results from rock chip sampling including 20 metres at 7.1 grams per tonne gold (sample width), 39m at 1.1gpt gold open to the north, and 42m at 0.36% copper and 0.42gpt gold open to the north.

"Liamu is essentially a 15 square kilometre intrusive system which is shedding gold and while not all of it is considered to have high potential, there are a number of areas within that holding which are very promising," Moyle said.

"We have rapidly advanced the project from a grassroots operation in late 2009, by conducting a tried and tested process of drainage geochemistry, mapping, ridge and spur soil sampling, trenching and rock chip sampling over the past six months, during what is PNG's often-challenging wet season.

"We are now embarking on an initial drilling program to help us gain a better understanding of the source and type of mineralisation present and geophysical surveys are being considered to assist targeting."

Drilling is being conducted using an advanced triple-tube diamond drill rig from Canada, which Goldminex has had onsite since 2008.

Its light weight means it can be shifted easily by helicopter or manpower while keeping drilling support costs down - a big plus in a remote environment, which is prone to high financial burn rate with helicopter transport costs representing a major component.

"We have a heavy reliance on air transport to access many of our prospects and Liamu is no exception," Moyle said.

"We have made a concerted effort to minimise aviation costs so we can focus expenditure on exploration activities."

Although Goldminex's main focus is on returning value to stakeholders through major discoveries, increasing cash reserves in order to advance exploration is a close second.

PNG is not usually the place where a company can make money from a resource of less than 1 million ounces of gold unless it is extremely high grade, primarily due to capital costs associated with setting up production in such rugged terrain.

"If we found an economic deposit at Liamu for example, we would need to establish the essential infrastructure such as electricity, roads and accommodation from scratch," Moyle said.

"We have reasonably easy coastal access so it would be relatively simple to build a road to the project to move the product for export, however, infrastructure would still be a big investment.

"To get a project over the line in this part of the world it needs to be large, preferably with a high-grade gold component and lots of it.

"I would like to believe that we could find that opportunity at Liamu but we will not know until we have completed a substantial exploration program to cover its large surface signature."

All indications Goldminex has received from the initial geological and geochemical surface sampling suggest that it is highly prospective, with favourable high grade gold intercepts and broad lower grade porphyry gold-base metals mineralisation.

With $10.2 million cash at hand, Goldminex will continue its focus on Liamu for the remainder of 2010 and continue its regional exploration programs at several other projects within the Owen Stanley portfolio in order to generate opportunities.

"We currently have two field teams conducting regional drainage sampling at the Bonua project, which is down to the southeast [of the ranges]," Moyle said.

"Following recent successful landowner negotiations at the Wavera project, which we consider prospective for porphyry gold-copper mineralisation, one of our teams is preparing to carry out infill drainage sampling together with mapping, rock chip and soil sampling there in the coming months."

* This report, first published in the September/October 2010 edition of RESOURCESTOCKS magazine, was commissioned by Goldminex Resources


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