BGM, a private Australian company, has three projects covering copper, gold, silver and zinc and will be acquired at cost of £648,000 payable in shares and £50,000 in cash.
Papua is raising £1.39mln at 1.15p to refinance ahead of the completion of the deal, while major shareholder Thalassa Holdings will also sell its 40mln shares alongside the placing.
Two of BGM’s directors will take senior managerial positions at Papua with David Price to become chief executive, while John Haggman will become technical director.
They have agreed to invest £118,400 into Papua through the placing, while another director, Michael Somerset-Leeke, will invest a further £149,500 at 1.15p in addition.
Paul Johnson also joins the board as a non-executive director.
Hugh McCullough, chairman, said the acquisition would refresh and reinvigorate Papua Mining.
“BGM is ideally placed to deliver rapid yet moderate cost exploration findings in a well-known and highly prospective area of Australia.
“The balanced mix of interests, with copper, silver, zinc and gold at the core, provides inherent resilience with the robust strength in copper and zinc commodity pricing of late, complemented by the protective nature of precious metal - gold interests.”
He added its copper porphyry exploration work in PNG also meant it now held an extensive geological database with considerable value.