Highlands Pacific Limited (ASX:HIG) Managing Director Craig Lennon provides an update on the company's projects, including record production at the Ramu Nickel Cobalt mine in Madang, PNG.
Jessica Amir: Hi, I'm Jessica Amir for the Finance News Network, joined by Highlands Pacific Managing Director Craig Lennon. Hi, Craig. Welcome to the Network.
Craig Lennon: Thanks, Jessica.
Jessica Amir: For new investors, can you just give us a quick introduction?
Craig Lennon: Yeah, sure. Highlands Pacific is a very interesting company. We've got a great portfolio of mining, exploration, development, and production assets that give investors exposure to cobalt, nickel, copper, and gold. The company's very well positioned for the battery revolution that's taking place. We've got interest in a $2.1 billion Ramu project, which is producing significant nickel and cobalt, one of the largest cobalt producers in the world. We got interest in Frieda River copper-gold project and exploration at Star Mountains and Sewa Bay.
All our projects are in Papua New Guinea. We've been there for 20 years, so we know it well. We have a market capitalization of about $80 million, so plenty of room for upside.
Jessica Amir: Now to more detail on each of your projects. Just start off with Ramu.
Craig Lennon: Ramu is a very large project. It's got a mine life of potentially 30 plus years. In 2017, we achieved record production rates, nearly 35,000 tons of nickel and 3,300 tons of cobalt. With cobalt at $80,000 a ton, US, and nickel at $13,000 a ton, the project's generating significant cash flows.
Jessica Amir: What about Frieda River?
Craig Lennon: Frieda River is a massive copper-gold project. It's got a metal inventory of about 13 million tons of copper and 20 million ounces of gold. We've got a 20% interest in this project. Our joint venture partner, GRAM, a Chinese state-owned enterprise has the balancing 80%. The project is currently in for permitting and the manager is investigating optimizations of the project currently.
Jessica Amir: What about Star Mountains?
Craig Lennon: Star Mountains is an exciting copper-gold exploration project. It's near Ok Tedi Mine, which is in the western part of Papua New Guinea. We've got some really exciting drilling results there: 600 meters at.6% copper and.85 grams per ton gold. It's 100% ours; Anglo-American joint venture partner withdrew from the project. Just recently, we announced a maiden inferred mineral resource on it, and we're currently looking for joint venture partners to come into the project.
Jessica Amir: Last, but not least, your Sewa Bay project.
Craig Lennon: Sewa Bay is a little nickel laterite exploration project down in the southern tip of PNG, which we're working with some Japanese partners on.
Jessica Amir: Turning to financials, Craig, just give us a snapshot of your finances.
Craig Lennon: Highlands is a sound financial position. We've got about nine million Aussie in the bank. We've got no large cash demands given the way we've structured our projects. We've got a small head office. We've got low corporate overheads and Ramu is in the process of generating cash returns for us. This month, we will receive our first distribution from the project.
Jessica Amir: Sounds good. So, Craig, what's your focus for 2018?
Craig Lennon: Look, Highlands has got projects at all stages of the development cycle. So, the focus doesn't necessarily change from year to year. All we're trying to do is advance our projects to create and share all the wealth. So, at Ramu, we're looking at maximizing the cash flows we can get out of the project and optimizing our debt levels. At Frieda, we'd like to see the permitting progress. Then, at Star Mountains, we'd like to see a joint venture partner come into the project.
Jessica Amir: Last, but not least, what can investors expect in terms of news flow over the coming quarter?
Craig Lennon: I think the biggest thing for investors over the coming quarter is that they'll realize that Highlands provides major leverage to cobalt and other battery metals. Ramu is going to produce it's maiden cash flow and that cash flow will grow over the years. At Star Mountains, we look forward to bringing into a joint venture partner into the project.
Jessica Amir: Wonderful. Craig Lennon, thank you so much for the update.
Craig Lennon: Thanks very much.