VANCOUVER – Every time drills probe the main Imwauna vein system at PNG Gold's (TSXV: PGK) 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 to the east.
All told, 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," said 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 to the 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," said Halldorson. "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 set of results suggest that Halldorson is correct. The company completed a 14,040-metre drill program at Imwauna earlier this year and the results – released Sept. 12 and headlined by 5.2 metres grading 29.4 g/t Au and 68.2 g/t Ag – had zero impact on PNG Gold's share price, which remained stuck 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 meters 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 better results from the program included 1 metres of 8.69 g/t Au and 12 g/t Ag, 3.7 metres grading 8.15 g/t Au and 16.9 g/t Ag, 1.1 metres of 10.5 g/t Au and 6.36 g/t Ag, 0.5 metre of 205 g/t Au and 43 g/t Ag, 1.0 metre of 9.8 g/t Au and 9 g/t Ag, 3.0 metres of 6.72 g/t Au and 26 g/t Ag, and 8.0 metres of 5.35 g/t Au and 10.6 g/t Ag.
The gold at Imwauna occurs as free gold or as electrum. Sulphides are rare to absent and preliminary bottle roll tests recovered 94 to 98% of the gold and 60 to 90% of the silver in Imwauna rocks.
The Normanby project sits on the north side of Normanby Island, approximately 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 main targets on the 68 km2 property. The other target, known as Kelas, is a similar structure running parallel to Imwauna roughly 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 easy: 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 constructed a 100 person camp at the project.
PNG Gold says that the site offers favorable terrain for mine development, being neither too steep nor too isolated. The topography that is present includes a valley parallel to the Imwauna structure; horizontal 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 market conditions since 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 grading 1 to 2 g/t Au over 30 to 60 metres, which suggest the 30 km2 Sehulea project hosts lower grade gold in larger zones.
In its recent Sehulea program PNG Gold assessed two low sulphidation epithermal gold targets, known as Weioko and Lantaona Hill, completing surface mapping, rock sampling, trenching, and a small drill program.
The mapping campaign covered 5 km2 across both targets while the trenching work probed the southern extension of the Weioko zone, which produced a 66-metre intercept grading 1.44 g/t Au and 7.48 g/t Ag 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 still 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 born in June 2011 from the merger of International Silver Ridge Resources and a private company, NMC Mining. NMC came to the merger with 50% stakes in both Normanby and Sehulea, as well as options to increase ownership in both properties to 100% through exploration spending, requirements that PNG Gold has since fulfilled.
When PNG debuted on the market in mid-2011 its shares were worth more than $1. The company took advantage of that market momentum and raised $38.4 million in July 2011, selling 51.2 million shares at 75¢ apiece. Its share price started to decline soon after; in the last 52 weeks PGK shares have ranged between 30¢ and 3¢. The company has 131 million shares outstanding.
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