When Xstrata (XTA-L) put its share of the US$5.3-billion Frieda River copper project in Papua New Guinea on the market in late June, there were a few raised eyebrows at the state of affairs in the country — especially given recent resource nationalization concerns in nearby Indonesia.
But ask WCB Resources’ (WCB-V) president and CEO Cameron Switzer about PNG and he will talk about its potential for world-class copper-gold deposits, and its skilled labour force ready to support regional development.
In December, Brisbane, Australia-based WCB agreed to an exploration farm-in agreement with Pan Pacific Copper (PPC) — a Japanese joint venture involving JX Nippon Mining & Metals and Mitsui Mining & Smelting — for the 180-sq.-km EL1747 mineral concession on the island of Misima, which is 40 by 10 km in size and part of an archipelago 630 km southeast of the capital Port Moresby.
Under the option agreement, WCB must spend A$1 million during its first year to earn 30% in the project, A$3 million to earn an additional 19% in year two, and a final A$5 million in year three to earn its full 70%. PPC also retains a mineral offtake agreement hinged on prevailing metal prices.
“The important thing to realize is the geological pedigree of Misima Island,” Switzer explains during an interview. “It is a historic producing area, and more importantly it is located in what I like to call the ‘land of elephants.’ If you look at some of the similar projects to the west you can see why we’re excited about its prospects. We think we have something that has a lot of the features that would suggest we’re onto something pretty special.”
When Switzer mentions elephants in geolgical neighbourhood, he is referring to world-class deposits like Freeport-McMoRan Copper & Gold’s (FCX-N) Grasberg copper-gold asset in Irian Jaya, and the monstrous Wafi-Golpu gold project controlled by Newcrest Mines (NM-T) and Harmony Gold (HMY-N) in Papua New Guinea.
Misima was previously home to an open-pit, gold-silver mine operated between 1990 and 2001 by Placer Dome — acquired by Barrick Gold (ABX-T, ABX-N) in 2006 — which produced 4 million oz. gold and 20 million oz. silver before its closure due to low metal prices.
Switzer says the infrastructure has been disassembled and moved, but WCB still has access to a deepwater port, which makes it possible to ship in heavy gear and machinery.
In early June the company received welcome news when the historic open pit, held under Special Mining Lease 1 (SML), was merged into its existing mineral licence.
“Our indications and discussions with people who have been involved in the project is that the mineralization in the historic pit is open at depth and along strike in a number of directions,” Switzer comments. “We’re trying to source the appropriate database at the moment, but the old mine is a real easy win for us. It’s definitely our top priority, with a focus on the bigger auxiliary targets afterward.”
WCB has already established three more targets through rock-chip and soil sampling that it says are prime for further exploration.
“Our belief is that like many of the other major and significant gold deposits you see around the world, there is that strong spatial association between gold and big porphyry copper deposits at depth,” Switzer says. “That is what we think we’re dealing with at Misima. The issue we’ll likely face is that we’re going to have so many good targets, especially following the acquisition of the SML area.”
WCB’s three greenfield targets include: Quartz Mountain, Porphyry 2 and a northern gold zone called Boiuo. Surface data have demonstrated copper, lead and zinc distribution, as well as high silver content.
WCB has collected a total of 2,500 soil samples so far, and encountered coherent zones of greater than 0.05% copper and several areas in excess of 0.1% copper, with peaks of 0.31% copper and 2.6 grams gold per tonne.
“We established three high-order anomalies with the surface sampling,” Switzer explains. “Quartz Moutain is defined by impressive molybdenum, lead and gold results. We also have the target we’re interpreting as a ‘classic island arc’ porphyry, which is exciting due to the sheer size and tenor of copper and gold anomalism. The third target to the north was a surprise, though it shares similar geochemical character with previously mined deposits on the island.”
When it comes to infrastructure, Misima Island has a single dirt road. The major settlement — named Bwagaoia — is home to 1,000 people and receives power from a 420-kilowatt hydroelectric dam.
According to Switzer one of the underrated benefits of the island is its mining history. Many of the local population still makes use of a commercial airstrip to work at major mining operations in the South Pacific, so finding skilled labour has turned out to be a straightforward task.
“As far as Papua New Guinea is concerned, we’re full-speed ahead. It’s rooted in the Westminster system and there is a clearly defined mineral resources act based on an Australian analogue,” Switzer comments, when asked about local conditions. “We’re happy with that. The landowners on the island have been tremendous — they’re very approachable and friendly. It’s all quite clear and transparent.”
WCB is on the well-trod path of Australian-based explorers adding a Canadian stock market listing to raise awareness and funding in North America for ongoing exploration work closer to home. The TSX Venture listing is its sole listing worldwide, and the company went public in April 2010.
The company closed a private placement with Casimir Capital in March, issuing 2.8 million shares at 75¢ per unit and raising US$2 million. WCB also negotiated a relatively low commission structure, paying only 6% cash and 6% broker warrants for the transaction. Financing fees have jumped notably in a tightening market.
“The financing reflects our asset value. We’re a smaller company with big aspirations, and big targets behind us to back us up,” Switzer says.
WCB has 21 million shares outstanding and a $10-million market capitalization.
The company has traded within a 52-week range of 8¢ and 97¢, and moved as high as 70¢ since May, but closed at 40¢ at presstime.