News: Highlands Pacific places $5M in stock to PanAust Ltd

Highlands Pacific (ASX:HIG) has welcomed PanAust Limited (ASX:PNA) as its new joint venture partner in the Frieda River Copper-Gold Project in Papua New Guinea, replacing Glencore.

PanAust is also acquiring $5 million worth of Highlands shares at $0.0776 per share, following an earlier placement in November 2013.

This is a substantial premium to Highland's market price of around $0.065, and could herald a period of increased interest in PNG exploration assets from larger miners.

Following completion of the PanAust/Glencore Agreement, under the terms of the Highlands/PanAust Agreement, PanAust and Highlands will respectively hold 80% and 20% of the Frieda River Joint Venture.     

Should the Government of PNG elect to take up its right to 30% of the project, PanAust will sell down the first 20% of its joint venture interest.

Thereafter the parties will sell down in equal amounts. 

Where the Government of PNG elects to take up its maximum 30% of the project, joint venture interests will be 55% to PNA, the Government of PNG 30% and Highlands 15%.
   
Highlands is free carried until finalisation of the definitive feasibility study for PanAust’s development concept and  will appoint and fund the cost of an  independent expert to provide a peer review. 

PanAust will also be responsible for 100% of the costs to maintain the Frieda River project site, assets and community relations programs.

This second placement will see PanAust’s holding in Highlands increase from 7.5% to 14% and will lift Highlands’ cash balance to $11 million. 

The share  placement is scheduled to take place on 1 September 2014.