Work on preparing and drilling new prospects at the Misima gold project in the Solomon Sea has commenced, with Kingston Resources planning to extend the current resource and develop new mining areas.  Kingston Resources Managing Director, Andrew Corbett, tells Business Advantage PNG he expects drilling programs to commence in April.

Kingston Resource’s Andrew Corbett. Credit: Kingston Resources

‘Misima’s 2.8 million ounce resource base is a great starting point and has helped de-risk the project,’ he says.

Corbett adds that the Misima resource represents ‘a head start and on top of that we have a number of new prospects to be drilled.’

Kingston has contracted a Papua New Guinean-based company to carry out the drilling program, which will commence in April and is expected to continue until the end of 2018.

The junior explorer is planning to drill around 10,000 drill metres this year.

‘Misima operated as an open-pit gold mine from 1989 to 2004 and produced around 3.7 million ounces of gold.’

Mobilisation of the drilling rig, consumables and equipment, via a barge from Lae, will commence in the coming weeks. Preparations for earthworks for drilling platforms are underway.

While there is no formal timeline, Corbett hopes to be looking at mining studies towards the end of 2018.

Capital raising

Misima operated as an open-pit gold mine from 1989 to 2004 and produced around 3.7 million ounces of gold.

‘The pedigree of this project, and that it successfully operated under Placer Dome and later Barrick Gold, further de-risks the venture and gives Kingston and its shareholders confidence.’

Kingston raised A$4.3 million (K10.7 million) in February through an oversubscribed capital raising to fund the drilling program.

‘There is no doubt we have seen a turning point in the sector with the resources market improving.’

Following expenditure of A$1.8 million (K4.5 million) over the next six months, Kingston’s share in the project will increase from 49 per cent to 70 per cent.

Corbett says with support from the local community and a skilled local workforce, there is no reason why the company can’t bring Misima back into operation.

With the resources market improving, Corbett says it’s the right time to start work on Misima.

Misima operated as an open pit gold mine from 1989 to 2004. Credit: Placer Dome.

‘There is no doubt we have seen a turning point in the sector with the resources market improving and great support for exploration companies.’

‘It hasn’t been a smooth recovery, but the market is continuing to improve.’

Stable environment

Gold prices were around US$300 per ounce when Misima closed, so with the current gold price at around US$1300 per ounce, Corbett says this is a big positive for Kingston and its investors.

As the sector continues to move in the right direction, companies planning to invest in Papua New Guinea are seeking stability in the fiscal regime and mining regulations, according to Corbett.

‘Having a stable environment to develop your business model around is important, and the Papua New Guinean government has been doing a good job of maintaining that stability in the mining sector.’

While it’s still early days in the revival of the Misima project, Corbett says Misima was a world-class project and it has the potential to be one again.

‘It will take time, exploration and capital to get the project base rebuilt, but considering the pedigree of the project, we are excited to commence drilling,’ Corbett adds.

The new prospects are expected to extend the current resource and potentially uncover new mining areas.