Triple Plate Junction primed for an exciting and potentially transformational three months

The next three months are probably the most important in the short history of Papua New Guinea-focused gold explorer Triple Plate Junction (LON:TPJ).

Results from its Crater Mountain project last week gave us a flavour of what’s on the horizon, and bumped the share price up around 12 per cent. The results from the first deep drill are expected next month.

However, the big bang will come when we receive drill updates from the joint ventures with industry giants Newmont (NYSE:NEM) and Newcrest (ASX:NCM), as well as an update on the plans of another big name partner, Barrick Gold (TSE:ABX).

"The market and our shareholders have been waiting for this for years,” says Triple Plate chief executive Fraser McGee, referring to what he hopes will be a steady stream of positive news.

McGee worked for the RAB Special Situations Fund before being recruited by TPJ. So he knows the scale of the opportunity.

But he is also aware of how the company is viewed after the previous management, led by Ian Gowrie-Smith, wasted money and time on fruitless projects in Zambia.

However, he is making progress changing perceptions. The recent City fundraiser is a case in point. 

It delivered £2.2 million of new cash at a nine per cent premium to the market price on the day, and the backing of a number of serious investors who can see the long term potential of Triple Plate.

That potential lies in the company's four projects in PNG – Morobe, Wamum, Manus Island and Crater Mountain.

The prospectivity of the Morobe project is underlined by the fact that Newmont completed phase one of its earn-in some two years ahead of schedule, spending US$6 million in the process.

This gave the American mining giant a 51 per cent stake, which rises to 70 per cent once it completes a phase -two at a cost of a further US$9 million. 

This is expected to be completed this quarter - some three years ahead of the “back-stop date”. 

The excitement of Morobe and Wamum is their proximity to Wafi-Golpu, the 40 million ounce, 15 million tonne gold-copper deposit owned by Harmony and Newcrest whose ground abuts the company's projects with both Newmont and Barrick.  

And it explains Newmont’s desire to crack on with exploration. Phase three is an important milestone for Triple Plate as it must decide whether to fund its part of the exploration programme.

The alternative is to go down to a “hard floor” 25 per cent stake in Morobe, in which case it will be carried until the mine goes into production. It would then pay Newmont back from the proceeds of gold sales.  

Before it makes this decision it has the results of the latest campaign to consider. 

Newmont’s investment has so far paid for extensive and continuing heli-mag, geological mapping, surface and geochemical sampling.

It has identified targets including the current drill site at Hides Creek, where a 3,000-metre diamond drill programme commenced in July 2011. 

The results of that campaign are expected next month and could light the blue touch-paper under the stock.

At Wamum, Barrick has spent US$9.5 million to date on the project and now owns 88 per cent. But so far that 5 million ounce-plus gold discovery has eluded the Canadian group.

Triple Plate’s McGee initially suspected Wamum was falling down the priority list. 

However he is now more encouraged by the recent dialogue with the world’s largest gold producer, and hopes Barrick will reveal its plans for the project later this month.

“We have gone from what looked like a potential care and maintenance programme to getting back out in the field and re-looking at the data,” McGee adds.

“They are looking at it with fresh eyes and a new team and we hope this week they will be back in Toronto looking for a new budget which we hope will include some drilling.” 

Manus Island is another huge opportunity for TPJ and partner Newcrest, which will earn an 80 per cent interest in the project by investing US$6 million in exploration.

At the current rate of spend it will have achieved this financial milestone by the end of the first quarter of next year. 

In August, Newcrest completed a helicopter-borne geophysical survey over the entire 700 square km of the project at Manus Island and continues a programme of mapping and sampling over the entire property.

A 3,000 metre drilling campaign is expected to begin next month with the first results emerging around Christmas and beyond, McGee reveals.

At Crater Mountain, where it is partnered with ASX junior Gold Anomaly, Triple Plate has committed to the first 3,000 metres of a programme of up 10,000 metres of drilling, which will now include deep drilling (up to 1,000m depth) with the arrival of the new second rig.

This it hopes will help uncover a deeper-lying, high grade copper-gold deposit. And indeed the latest drilling results, announced on Monday, lend some support to this thesis.

“All the indications are there,” says McGee. “We need to find what is down deep. In November we should have more results. We hope it will change Crater Mountain from a bulk tonnage story to a higher grade (deposit).” 

Noting the failures of the previous regime, the laser focus of McGee and the Triple Plate team is Papua New Guinea.

This means it is looking for a partner to take forward the Pu Sam Cap project in Vietnam, where it has spent US$5.5 million since the inception of that project but which it is now looking to capture value for.

“They are still a highly prospective set of licences which we will look to maintain after investing a significant amount at the front end of the recent work programme.

“We believe that we are able to maintain the licences for some time while we look for a potential joint venture earn-in.”

With partnerships with three of world’s biggest gold producers, and operating in elephant country, it is surprising then that Triple Plate’s valuation is a mere £14 million.

This reflects the scepticism among rank and file investors mindful of what has gone before. 

However McGee doesn’t dodge the issue: “There are legacy issues with this company. 

“A lot of money was raised and spent in Zambia. There are legacy issues with the TPJ name. 

“The shareholders managed to oust the incumbent management last June, which is the best thing that has happened to this company in a long, long time.”

This valuation anomaly is no doubt what attracted Newmont when it tabled its 4 pence a share offer last November and further increased their holding by purchasing a significant block at 6.375 pence this year. 

McGee says the company’s 26 per cent shareholder has advised that it won’t re-bid in the future unless it receives a unanimous recommendation from the board.

So the focus now is on the results from three key projects, which could make a mockery of Triple Plate’s current stock market valuation.