VANCOUVER — Every time drills probe the main Imwauna vein system at PNG Gold’s (TSXV: PGK; US-OTC: ISRJF) Normanby project in Papua New Guinea, they return high-grade gold from a steeply dipping structure that is narrow but easy to access — because a valley parallels the structure just 100 metres east.
It is a scenario that PNG Gold thinks is designed to be mined. And the Vancouver-based junior plans to continue demonstrating Imwauna’s potential, just as soon as the markets turn around.
“Our main concern right now is to conserve cash because we just don’t know how long this market is going to last,” says PNG Gold president Neil Halldorson. “We certainly don’t want to raise money at these prices — even if we did, to do that is difficult. Junior exploration is just out of favour right now.”
PNG Gold is in an enviable state compared to many junior miners, with $6.5 million in the bank. If the markets were better, the company would still have its four drills turning, probing both Normanby and Sehulea, the company’s other Papua New Guinea project, 10 km east.
“We did have a fairly aggressive drill program, and we would have kept at that if we felt the market was adequate to raise additional funds,” Halldorson says. “But for now our drills are inactive — they’re under tarps, ready to go again if the market will just co-operate. Because we do have cash, but we also realize that any work we do right now is probably going to get no value in the market.”
PNG Gold’s latest results suggest that Halldorson is correct. The company completed a 14,000-metre drill program at Imwauna earlier this year, and the results — released Sept. 12 and headlined by 5.2 metres grading 29.4 grams gold per tonne and 68.2 grams silver per tonne — had zero impact on its share price, which remained at 4¢.
Imwauna is a near-surface, low-sulphidation, epithermal vein system that strikes north–south. Gold is contained in quartz veins that vary in thickness between 0.5 and 6 metres. To date PNG Gold has identified two main zones at Imwauna, dubbed Henry and Klink, and tracked the structure to 400 metres depth and along almost 2 km of north–south strike. It remains open in all directions.
PNG Gold completed 54 holes in the latest Imwauna program. Some of the best results from the program include 1 metre of 8.69 grams gold and 12 grams silver, 3.7 metres grading 8.15 grams gold and 16.9 grams silver, 1.1 metres of 10.5 grams gold and 6.36 grams silver, 0.5 metre of 205 grams gold and 43 grams silver, 1 metre of 9.8 grams gold and 9 grams silver, 3 metres of 6.72 grams gold and 26 grams silver, and 8 metres of 5.35 grams gold and 10.6 grams silver.
The gold at Imwauna occurs as free gold or as electrum. Sulphides are rare to absent and preliminary bottle-roll tests recovered 94–98% of the gold and 60–90% of the silver in Imwauna rocks.
The Normanby project sits on the north side of Normanby Island, 80 km northeast of Alotau, which is the capital of Milne Bay province in eastern Papua New Guinea. The Imwauna structure is one of two major targets on the 68 sq. km property. The other target, called Kelas, is a similar structure running parallel to Imwauna, 650 metres to the west. Kelas has been sampled and trenched, but not drilled.
Papua New Guinea is often a difficult country to navigate because of its rugged, jungle-clad hills and lack of roads. Access to the Imwauna project, however, is relatively simple: a four-hour boat ride from Alotau brings you to a landing from whence a 4 km road runs to the site. PNG Gold has built a 100-person camp at the project.
PNG Gold says that the site offers favourable terrain for mine development, being neither too steep nor too isolated. The topography that is present includes a valley parallel to the Imwauna structure. Adits from this valley would reach the structure in less than 100 metres.
Two years ago, PNG Gold had planned to develop several such adits and take an underground bulk sample, but worsening market conditions have delayed those plans.
After drilling at Imwauna earlier this year, PNG Gold shifted its attention 10 km east to the Sehulea project. Previous explorers pulled intercepts from the target such as 1-2 grams gold over 30 to 60 metres, which suggest the 30 sq. km Sehulea project may host lower-grade gold in larger zones.
In its recent Sehulea program PNG Gold assessed two low-sulphidation epithermal gold targets named Weioko and Lantaona Hill, and completed mapping, rock sampling, trenching and a small drill program.
The mapping effort covered 5 sq. km across both targets, while the trenching work probed the southern extension of the Weioko zone, which produced a 66-metre intercept grading 1.44 grams gold and 7.48 grams silver from surface in an earlier drilling campaign. Finally, three drill holes probed a cluster of induced polarization targets at Lantaona Hill.
Results from the program are pending, but Halldorson says the work “looked quite promising.” He said that if the results from Sehulea are “promising enough,” the company will probably go back for another look later this year.
PNG Gold owns Normanby and Sehulea outright. The company was created in June 2011 by merging International Silver Ridge Resources and the private company NMC Mining. NMC brought to the table its 50% stakes in both Normanby and Sehulea, as well as options to increase ownership in both properties to 100% through exploration spending, which PNG Gold has since fulfilled.
When PNG Gold debuted in mid-2011 its shares were worth more than $1. The company took advantage of that momentum and raised $38.4 million in July 2011, selling 51.2 million shares at 75¢ apiece. Its share price declined soon after. In the last 52 weeks PNG Gold shares have ranged between 3¢ and 30¢, and last traded at 4.5¢. The company has 131 million shares outstanding.
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