Otterburn Resources (OBN.V) has announced Barrick has notified K92 Holdings (which will be owned by Otterburn Ventures) the renewal of the mining license at the Kainantu gold project in Papua New Guinea has been granted. Otterburn will acquire the shares of privately-held K92 Holdings by issuing 44 million new shares at a deemed price of C$0.50/share.
The Kainantu project is currently held by Barrick Gold (ABX.TO, ABX) which declared it to be a non-core project. Barrick acquired the project in 2007 for $141M and has spent almost $35M in exploration and development at Kainantu before deciding to sell it to K92 for an initial $2M payment and up to $60M in earn-out payments. Every time K92 is able to put an additional 1 million gold-equivalent ounces in the measured and indicated categories, Barrick Gold is due $20M until the threshold of 3 million ounces has been reached within 10 years.
The total current resource estimate contains 360,000 gold-equivalent ounces in the measured and indicated categories (at an average grade of in excess of half an ounce per tonne of rock) as well as an inferred resource estimate of 1.8Moz at in excess of 11 g/t AuEq. There is a processing facility at the project and K92 could be in a position to restart the gold production later this year as the company plans to refurbish the existing mill.
Otterburn will be a name for your watchlist as there aren’t a lot of turn-key ready high-grade gold properties around.
Disclosure: The author holds no position in either Otterburn, K92 or Barrick Gold. Please see our disclaimer for current positions.
