NEW GUINEA GOLD/COPPER PRODUCER MAKING A COMEBACK Sydney -...

NEW GUINEA GOLD/COPPER PRODUCER MAKING A COMEBACK

Sydney - Monday - November 16: (RWE Aust Business News)
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OVERVIEW
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Sooner or later the stunning gold price of $1,119.10 oz for the
February COMEX contract last Friday should have an impact on Papua New
Guinea gold/copper producer Highlands Pacific Ltd (ASX:HIG).
In addition the company has made some impressive discoveries
which is bound to lift the company's resource total in the current year.
Highlands Pacific recently reported a 978 metre deep hole from
the Horse-Ivaal Trukai deposit at its Frieda River copper gold project in
Papua New Guinea.
This significantly extends the depth of mineralisation and
highlights Frieda's potential as one of the world's top 10 emerging
copper gold projects.
Highlands Pacific appears to have put is previous hedging
problems, which almost brought the company to ruin, behind it.
Exploration drilling by Highlands's joint venture partner Xstrata
Copper was designed to test the depth extension of the known Frieda
mineralisation as part of geotechnical and pit design work for the
pre-feasibility study due in mid-2010.
An updated Mineral Resource statement for Frieda is expected by
the end of 2009.
The new deep hole result (hole 280XC09) has recently been assayed
and returned three copper and gold intersections at a 0.2pcCu cutoff of
412 metres at 0.6pc copper, 0.2g/t gold; 10 metres of 0.2pcCu and 0.1g/t
gold and 522 metres of 0.4pcCu and 0.5g/t gold, for a total hole depth of
978 metres and finishing in mineralisation.
At a 0.1pc Cu cut-off the continuous intersection totals 968
metres @0.5pc Cu and 0.4g/t gold starting from 10m down hole.
Managing director John Gooding said in all of his years in
exploration and mining, he has never heard of such a long copper
intersection in one hole.
"We already knew the Frieda mineralisation extended from surface
to about 600 metres, but to have mineralisation at 978 metres is simply
outstanding," he said.
The scoping study plans released earlier this year envisaged an
open pit to a depth of about 400-600 metres, the base of the current
resource model.
"Whilst we note that a single deep intersection itself will not
materially change the revised resource estimate, this information
provides further confidence in the size of the deposit.
"Suffice to say Frieda River has the potential to become a
low-cost and very large open-cut copper mine," Mr Gooding said.
The deep hole drilling formed part of the Frieda River project's
$US36 million budgeted work program for 2009.
Drilling at Frieda is currently focused on geotechnical work
including in-pit studies, process plant site locations.
A pre-feasibility study is due for completion in August 2010 at
which time, subject to the project continuing to meet project hurdles,
the project will advance to a 12-month feasibility study.
This would allow the project to potentially commence construction
in 2012 and production in 2016.
Another encouraging project is the Ramu nickel cobalt project,
located 75 kms west of the provincial capital of Madang, and will produce
an annual output of 31,500 tonnes of nickel and 3,300 tonnes of cobalt
contained in high-grade concentrate over a 20-year mine life.
The mineral resources at Ramu have the potential to increase the
mine life by a further 15-20 years.
The project is currently in construction phase with commissioning
due to commence by the end of 2009.
Highlands has an 8.56 per cent interest in the Ramu project which
will increase to 11.3 per cent at no cost to the company after repayment
of the debt raised to finance the project has been completed from
operating cash flow (estimated to be 10 years).
From commissioning, Highlands is able to have access to its
pro-rata 8.56 per cent share of Ramu's post-debt servicing net cash flow.
Highlands also has an option to acquire an additional 9.25 per
cent at fair market value which could increase its interest to 20.55 per
cent.

SHARE PRICE MOVEMENTS
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Shares of Highlands Pacific barely moved above 37c last week.
Rolling high for the year is 40.5c and low 4c. The company has 660.1
million shares on issue with a market cap of $244.2 million.
On September 7, the company released its interim financial report
for the half-year ended June 30.
The result was an operating profit of $US3.3 million.
The profit was attributable in large part to the gain on the sale
of exploration licence 1277 to Barrick Gold Corporation (a transaction
first signed in December 2007) and the gain on the sale of surplus
properties in Madang.
Mr Gooding said at the time that Highlands is in a strong and
sound financial position with $US23.3 million of cash in the bank and no
debt.
"Commencement of commissioning of the $US1.4 billion Ramu nickel
project is only months away and the Frieda copper gold project is
progressing well through a pre-feasibility study," he said.
"With the recent lift of base metal prices, the company is in a
great position with two emerging world-class assets and a portfolio of
exploration prospects," Mr Gooding declared.
Meanwhile, Highlands Pacific has embarked on a significant new
exploration campaign at the Nong River prospect adjacent to the giant Ok
Tedi copper-gold mine in the western region of Papua New Guinea.
Highlands has exercised its option to accelerate the development
of the Nong River exploration area (EL 1312) by sole funding an
exploration program over the known copper gold porphyry prospects covered
by the Nong River and Tifalmin (EL 1392) area.
Nong River EL is in a joint venture with Xstrata Copper while
Tifalmin is 100 per cent owned by Highlands.
This area is only 20 kms from the Ok Tedi mine - a mine that has
been operational for 25 years and produced over 3.7 Mt of copper and 11.1
Moz of gold.
The exploration program - initially $US3 million, will commence
later this quarter and consist of 860 kms of airborne electromagnetic
survey over both exploration licences and 2,400m of diamond drilling
during 2009 and 2010.
"The company is very excited by this opportunity, which has the
potential to grow into a third major asset in our portfolio together with
the $US1.4bn Ramu nickel and $US4bn Frieda copper gold project," said Mr
Gooding.
"What we already know about Nong River is the shallow copper-gold
hits achieved by Kennecott's drilling in the early 1970s.
"The use of modern geophysical surveys in association with
previous work on the ground will be the key to pinpointing areas for
drilling and revealing its full potential.
"Its close proximity to Ok Tedi is of particular advantage and
opportunity in terms of infrastructure, people and services," Mr Gooding
said.
The area covered by the Nong River exploration licence has been
explored by a number of major mining companies in the past.
In 1972 Kennecott (now part of Rio Tinto Plc) had the following
results: DDH-1: 22m (78m to 100m) @ 0.28pc Cu and 0.3 g/t gold; DDH-2:
94m (94m to 190m) @ 0.36pc Cu and 0.6 g/t gold; DDH-3: 89m (16m to 105m)
@ 0.6pc Cu and 0.4g/t gold; DH-4: 90m (24m to 107m) @ 0.66pc Cu and 0.35
g/t gold.
Highlands's exploration program will follow up on known porphyry
copper and skarn mineralisation identified by Kennecott and other
parties.
Some of the results of this previous work have grades and
thicknesses that in today's terms can be potentially economic.

BACKGROUND
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Highlands Pacific Ltd is a PNG-incorporated mineral resource
company with a focus on gold and base metal prospects in Australia and
the Asia Pacific region.
Its objective is to create shareholder wealth through the
exploration, development and operation of economic projects.
Highlands Pacific listed on the ASX on June 12, 1997.
Its major development assets are holdings in two of Papua New
Guinea's major resource assets, the $US1.37bn Ramu nickel cobalt project
and the Frieda River copper gold project, where Xstrata has spent about
$US47m in the past 18 months.
Highlands is also due to commence exploration on the highly
prospective Nong River and Tifalmin licences about 20 kms north of Ok
Tedi.
The Frieda copper project is one of the world's largest
undeveloped copper/gold resources.
Frieda River is 170 kms northwest of the giant Porgera gold mine.
The project owners are Xstrata Frieda River Ltd (76.2 per cent),
Highlands (16.9 per cent) and OMRD (6.9 per cent).
Highlands has a free-carried interest through to completion of a
feasibility study (required to be completed by January 2012).
The results of an extended scoping study were released in early
2009 and envisaged a 40Mtpa plant with production over an initial 27-year
mine life averaging 200,000 tonnes of copper metal and 240,000oz per
year.
Xstrata's budgeted expenditure for 2009 is $US36 million, with
similar annualised levels of expenditure expected for the first half
of 2010 prior to a decision on a 12-month feasibility study.