St Barbara set on further exploration in Papua New Guinea, says MD

Welcome,

St Barbara recently announced that gold production from its Simberi mine in New Ireland rose by 39 per cent in the year to June: exceeding ‘the upper end of guidance.’ Managing Director Bob Vassie tells Business Advantage PNG that the company is looking to explore more in Papua New Guinea.

St Barbara's Simberi mine. Source: St Barbara.

St Barbara’s Simberi mine. Source: St Barbara.

Simberi produced 26,935 ounces of gold in the March quarter and 110,286 ounces for the year to June, according to St Barbara. On the back of such solid results, the company is keen to explore further.

Managing Director Bob Vassie tells Business Advantage PNG he is planning to spend about A$7 million (K16.9 million) on exploration in Papua New Guinea in the 2016/2017 financial year.

Oxide ore at the company’s Simberi site will be mined out in the next few years, which has prompted St Barbara to make a decision on whether to invest in developing the plant to process sulphide ore.

‘With the mine operating profitably, we can fund that exploration effort and fast track the priority areas.’

‘If we can find additional, nearby sources of oxide or sulphide ore, it could potentially be processed at Simberi and this would add to the economics of the project,’ Vassie explains.

Turnaround

St Barbara's Bob Vassie. Source: Sheona Beach Photography

St Barbara’s Bob Vassie. Source: Sheona Beach Photography

With operations at Simberi making a turnaround back into profitability, and continuing to break quarterly production records, Vassie says the company is keen to explore more ore sources to extend the life of the mine.

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‘With the mine operating profitably, we can fund that exploration effort and fast track the priority areas,’ he says.

The company is looking at two locations: Tatau Island, which is located about five kilometres south of Simberi, and Big Tabar Island. Until recently, Tatau Island was underexplored as a result of access issues, which have since been resolved through agreements with the local landowners’ association.

Tatau Island is also prospective for copper/gold porphyry deposits.

Other companies have explored Tatau, with inconclusive results. St Barbara hopes to determine whether there are minable deposits on the island, which may be able to contribute oxide ores to the existing Simberi operation, or sulphide ores to a future sulphide project.

‘With only a few years of oxide life left at Simberi, we now need to act promptly to assess Tatau Island’s potential,’ says Vassie.

Access

Preparatory work is underway, with St Barbara seeking to finalise access arrangements with local landowners. Support facilities for employees working on site will then be developed. It will involve barging supplies and machinery from Simberi, including an excavator and the drill rig.

‘We have identified a geophysical anomaly that is associated with a historical copper-gold porphyry target.’

Vassie says they have been able to do this quickly and have started drilling earlier than originally planned. Once camp has been set up on the island, drilling is expected to take several months at least.

Map of Simberi Island group. Source: St Barbara

Map of Simberi Island group. Source: St Barbara

On completion of drilling, the drill core will be sent to Queensland for analysis and interpreted by the company’s geologists, Vassie explains.

Proximity

Tatau Island’s close proximity to Simberi is likely to provide an opportunity for ore to be barged to the Simberi plant if there is sufficient volume and grade.

‘We have identified a geophysical anomaly that is associated with a historical copper-gold porphyry target. It certainly warrants drill testing and we started a deep drill hole there last week,’ Vassie says.

Tatau Island’s hilly terrain, dense vegetation and high rainfall will challenge any company seeking to develop the area. But Vassie says that Simberi has similar issues and he is confident St Barbara can overcome Tatau Island’s difficult landscape.

‘However, there is much less infrastructure on Tatau, so it is likely we would have to use Simberi as a base and barge supplies to Tatau,’ Vassie says.

Community

Close community engagement has been a factor in the success of Simberi, according to Vassie, who says the company must apply these same principles to the communities on Tatau Island.

‘It is possible that in time, if the drilling is successful, it could translate to real value for shareholders.’

He says it may take the best part of a year before St Barbara has a good picture of the prospects at Tatau. If mining does subsequently commence on the island, the economic benefits to locals will be significant, as has been experience at Simberi, claims Vassie.

‘The contribution to the New Ireland Province and Papua New Guinea as a country would include extended employment and skill development, additional expenditure on goods and services from local suppliers and the relevant taxes and royalties to the government.’

Acknowledging that exploring for resources is a relatively slow process, Vassie says at the moment Tatau Island has ‘exploration potential’. But it is possible that, in time, if the drilling is successful, it could translate to real value for shareholders.

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