australian business article 07 april

Below is an extract from an article which includes encouraging information about HIG.

PNG Gains credibility for exploration.
AFTER the depressing margin loan revelations of the past week, we have been searching for something positive to report, and we think we have found it in what many may consider the most unlikely of places: Papua New Guinea.

One theory is that PNG is gaining at the expense of the Philippines, where exploration and mining companies have been bedevilled by land ownership problems, communist and Muslim "armies" and bureaucracy.

The International Herald Tribune reports of talk that mining companies are deciding to avoid the Philippines and look for easier pickings in the region.

PNG has had its problems, but the Government is in favour of mining and trouble with locals tends to be localised and, in most cases, resolvable.

Our man in Port Moresby says the country is beginning to get some real credibility, having turned around its image in just a few years.

Barrick Gold is apparently making it clear to anyone who will listen that it believes PNG is among the most prospective places in the world, a position it has backed up by buying the Kainantu gold mine from Highlands Pacific (HIG) and installing a 200-man exploration team there.

The US major has also lifted its stake in the Porgera mine and invested $35 million in a gold project area operated by Allied Gold (ALD).

Highlands back in favour

HIGHLANDS Pacific has been in the doghouse with investors since problems at the Kainantu project threatened to drag it down.

Now, with $US30 million ($32.5 million) in cash after selling the mine to Barrick, the company is in a relatively cheerful position.

Until last week, hardly anyone knew that Chinese involvement in the massive Ramu nickel-cobalt project (in which HIG retains 8.56 per cent but can claw back to 20.55 per cent) had undergone quite a transformation.

China Metallurgical Construction has been seen as doing all the heavy lifting, but it has been revealed that three other heavy hitters quietly took 13 per cent stakes in October: Jinchuan Group, Jilin Jien Nickel and Jiuquan Iron & Steel. Jinchuan and Jilin bring considerable nickel production expertise to the consortium.

Meanwhile, Xstrata has just finished a scoping study at Frieda River, one of the largest undeveloped copper-gold projects in the world, where Highlands retains a 16.4 per cent stake.

The Australian company is also planning to explore for gold this year at Wau-Bulolu in an area that has so far yielded 4 million ounces of alluvial gold.