Highlands Pacific advancing PNG projects

Interviews

Transcription of Finance News Network Interview with Highlands Pacific Limited (ASX:HIG) Managing Director, John Gooding

Joel Spreadborough: Hello I’m Joel Spreadborough for the Finance News Network and joining me from Highlands Pacific Limited (ASX:HIG) is its Managing Director, John Gooding. John thanks for talking to us.

John Gooding: Thanks Joel.

Joel Spreadborough: Firstly can you introduce us to Highlands Pacific. What is your focus and where are your projects located?

John Gooding: We’ve got three projects in Papua New Guinea. We’ve got an interest in the Ramu nickel project which has just gone into production. We’ve got an interest in the Frieda River copper/gold project with our joint venture partners Xstrata PLC (LON:XTA). And we’re involved 100 per cent in some really extensive exploration just north of the Ok Tedi mine, in the Western Province.

Joel Spreadborough: What experience does Highlands have on its Board?

John Gooding: Oh look we’ve got a great Board. And just recently one of our directors retired after seven years and we appointed Bart Philemon, who is a previous treasurer in the Papua New Guinea Government and we are really pleased to have Bart on board. And in July an organisation called the PNG’s Sustainability Development Program, took a large equity cornerstone interest in Highlands and their representative on our Board is Professor Ross Garnaut, who you may recall. So we’ve got a really good background of legal, mining, exploration, commercial and political nous sitting there now.

Joel Spreadborough: Turning now to Papua New Guinea where Highlands has three main projects. Could you introduce us to each and tell us what they’re prospective for?

John Gooding: The Ramu nickel project is a plus twenty year project; it’s going to produce something like 31,000 tonnes of nickel every year. It’s in joint venture with Chinese partners, that was a $1.5 billion project and yeah, it’s just gone into commissioning. Next month we’re actually exporting our first lot of concentrate into China. So that’s been the culmination of about 35 years since it was discovered, so that’s really exciting.
The Frieda River project is a project that’s just getting to the end of a feasibility study. And as part of Xstrata’s buying responsibilities into the joint venture, they’ve had to spend about $300 million on a feasibility study for the project, and we’re expecting the final numbers for that at the end of this year. And Star Mountains is an exploration project; we’ve discovered a new porphyry province just north of Ok Tedi and we’re spending about $10 million a year there.

Joel Spreadborough: Looking closer now at the $US1.5 billion Ramu nickel/cobalt mine, what are the latest developments?

John Gooding: Yeah well we’ve just been commissioning since about March this year, we’ve commissioned two of the three autoclaves. We’ve produced about 24,000 tonnes of nickel/cobalt mixed hydroxide to date. As I’ve said earlier, we’re doing our first export run in a couple of weeks’ time and we’ll be gradually ramping up to 31,000 tonnes of nickel, we hope, by about the middle of next year.

Joel Spreadborough: So what do you expect will be the next milestone for the plant?

John Gooding: The next milestone for the project will be probably the third autoclave being commissioned and the second part of the acid plant. And then a month-on-month an increasing production profile.

Joel Spreadborough: You also have the Frieda River copper/gold project where Xstrata is your joint venture partner. What is your stake in the
project and your working relationship with Xstrata?

John Gooding: Yeah, we’ve got over 18 per cent equity in that project. Again that was a Highlands project, but a very big project and Xstrata is part of their farming. They’ve had to finance a feasibility study and because it’s such a large project, they’ve spent in excess of $270 million to date on doing that. Look, our working relationship with Xstrata is very good; you know they’re a very big mining house. They’re very experienced at copper/goldmining in particular; especially big porphyries and they’ve been a good partner.

Joel Spreadborough: Can you tell us a little bit more about the project. How many deposits does it consist of, and what is your overall resource estimate?

John Gooding: At Frieda River, the joint venture or the project is actually concentrating on only three deposits which are the Horse, Ivaal and Trukai deposits. Outside of the feasibility study, there are a couple of other targets very close to those feasibility study targets. And we’ve got a 470 million tonne deposit just sitting off to the side of a place called Koki, and another 170 million tonnes sitting in Ekwai. But the main resource that we’re studying at the moment is over 2 billion tonnes of material, so that will give a mine life in excess of 20 years.

We also have another deposit called the Nena deposit and Xstrata elected to bring that into the joint venture in January of this year, and paid us $10.8 million to do that. And that deposit is 53 million tonnes, but a really high grade copper deposit so that at some stage or another, that’ll become an important part of the process.

Joel Spreadborough: John let’s look now at Star Mountains project. How many exploration licences does it include, and what are they prospective for?

John Gooding: We’ve got four exploration licences and ELAs which is an application for licence. On one of those licences, Xstrata have an option to buy back in once we’ve produced a prefeasibility study on a project, by paying us three times what we’ve spent and also to carry it through to feasibility study. But the other licences we have are 100 per cent in our own name.

Joel Spreadborough: And what is your strategy for the Star Mountains project?

John Gooding: In the last couple of years we’ve done a lot of drilling up there, we’ve been concentrating on one particular target called Olgal. This area was first discovered about 40 years ago before Ok Tedi was discovered, and we’re really the first company to go back in there and be drilling there. It’s quite isolated but it’s a new porphyry deposit. We’ve found some really great targets, we’ve got over a dozen targets and in fact, one of the intersections we had there was almost 600 metres of mineralisation from surface. So it gives us a lot of excitement for going forward.

Joel Spreadborough: Turning to your financials. What’s your current cash position and for how long are you funded?

John Gooding: We’ve got $18 million at the moment; we’ve got no debt or hedging at all. We believe that’s probably satisfactory to take us through to the end of next year. But having said that, you know the economic situation at the moment in the world is a bit uncertain and we monitor that very closely to make sure that it’s sustainable.

Joel Spreadborough: Lastly John looking ahead, what are Highland Pacific’s main priorities for the coming year?

John Gooding: Yeah, look really to see Ramu go through to full production by the end of next year. Receiving the feasibility study from Frieda River and then I think during 2013, there’ll obviously be discussions with Xstrata and other parties and other stakeholders, including the Government regarding carrying that forward. And with Star Mountains, it’s just go and find a great ore deposit that the market will give us some recognition for.

Joel Spreadborough: John Gooding, thank you for the introduction to Highlands Pacific.

John Gooding: Good, thanks very much for the opportunity.

Ends
 
 

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