“It’s an early stage exploration play,” says Matthew Salthouse of Kainantu Resources Ltd (CVE:KRL).
“What we’re looking to do is create a platform for a cornerstone business that brings together expertise in the highly prospective Asia-Pacific region.”
The immediate focus in question is in Papua New Guinea, where Kainantu is leveraging two high-quality gold exploration projects. KRL North lies on the boundary of K92 Mining Inc (TSE:KNT), a five million ounce gold mine with some of the highest head-grade being recovered in the world at the moment. KRL South also lies in close proximity to K92’s acreage, about 25 km to the south-west.
The K92 project continues to produce interesting drill hits, and in 2019 accounted for the fourth richest drill hit of the year, according to a survey conducted by the Mining Journal, and this year it was awarded the 2021 PDAC award for best gold discovery in the world.
So, this is a prime region to be looking to develop, alongside the fact that both of the nearby projects controlled by Kainantu Resources sit on the same mineralised field that hosts the K92 mine.
“KRL North and KRL South are both highly prospective,” says Salthouse.
“KRL North is a relatively small tenement, but sits adjacent to K92 and shares a similar aero-magnetic heat map to K92 itself. As with K92, KRL South sits on the world renowned Kainantu fault line and we believe it also shares a lot of similar geological cross structures.”
The immediate focus will be on K92 South, where studies to date indicate mineralisation hosting a range of structures, including skarns, epithermal, and porphyrys. For now, the potential epithermal systems are getting the attention, and recent fieldwork, has, says Salthouse, been “highly encouraging.”
“All the data we’ve seen so far,” he says, “makes us more confident in working there. The focus is on the apparent epithermal system at KRL South around the Tirokave area, which we anticipate will yield encouraging early-stage results.”
In addition to petrology and geochemical work, trenching is ongoing, and when the results are compiled Kainantu will move onto geophysics, after which it expects to progress with a drilling programme.
As with many junior miners, the precise timing has been impacted by the coronavirus crisis, but it’s fair to say that the focus is on preparing for a significant drilling programme in coming months, rather than years.
“We expect a consistent flow of news from KRL South as we progress through the year,” says Salthouse.
The company currently has C$4.1mln in the bank, following a raising that took place at the end of last year. It also enjoys the support of a strong base of high-net-worth individuals in Vancouver, as well as some boutique institutions and backing from PI Financial and Haywood.
On that basis, Salthouse has been able to pace the company well.
“We are looking to build momentum and newflow as our company grows,” he says, a statement which hints not only at further positive developments at KRL South, but also at the wider vision of the company.
Because one of the key strengths of Kainantu Resources is its regional expertise, the plan over the medium and longer term is to build up the company with assets in and around Papua New Guinea, as a broader regional play.
Chairman Marcus Engelbrecht has plenty of regional know-how gleaned during his tenure at Archipelago Resources, while Salthouse himself is based out of Singapore and has also held executive roles at OceanaGold Corporation, Archipelago and at REA Holdings (LON:RE), a commodities house with Indonesian interests.
“I’ve worked in the mining sector in south-east Asia for a number of years,” says Salthouse, “and I’ve worked with a number of clever people in region in corporate strategy, finance, geology and mine engineering. Over the past two or three years as a grouping, we took the view that the gold price would accelerate, and opportunities would present themselves in region for teams with strong social licence credentials.”
In Papua New Guinea, Kainantu Resources is working with a strong local partner in Asia Pacific Energy Ventures, a successful PNG focused EPC business; with a track record of delivering outcomes for government and institutions.
But is Papua New Guinea as a mining destination really viable?
Salthouse notes a couple of factors on that score. The first is that Kainantu Resources has received the public backing of the Papua New Guinea Minister for Mining, Johnson Tuke. And the second is that despite some ESG issues, Papua New Guinea remains one of the key gold producers in the world and plays host to some of the world’s biggest miners; with many well-trained national gold mining professionals enthusiastic to further their careers.
True, with a country like Papua New Guinea you need people who know their way around. But Kainantu Resources has that expertise and the ground, the funds for exploration, and the ambition to grow rapidly maximising shareholder value.
Watch this space.