Frieda River project gets new partner

THE Frieda River gold-copper project now has a new joint venture partner to develop one of the world’s underdeveloped gold and copper deposits.
Highlands Pacific Limited, announced this week a new joint venture partnership for the Frieda River Project which will see Glencore Xstrata plc (Glencore) exit the project and PanAust Limited emerge as an 80% partner with a new vision to develop Frieda. 
PanAust will take up to a A$10 million (K24.78 million) placement in Highlands and will also relinquish any claw back rights regarding exploration licence EL 1312 in the Star Mountains.
PanAust has entered into a share sale agreement with Glencore under which PanAust will acquire
Glencore’s interest in the Frieda River joint venture by acquiring all of the shares held by Glencore in Xstrata Frieda River Limited (XFRL).
PanAust and Highlands Frieda Limited have agreed that the two parties will hold interests of 80 per cent and 20 per cent respectively in the Frieda River joint venture on completion of PanAust’s acquisition of the shares in XFRL and that any previous disagreement between XFRL and Highlands Frieda relating to earn-in percentages in the Frieda River joint venture will be settled upon completion. 
The terms of Highlands’ agreement with PanAust provide that should the Government of PNG elect to take up its right under PNG law to 30 per cent of the project, PanAust (XFRL) will sell down the first 20 per cent of its joint venture interest and thereafter the parties will sell down in equal amounts. 
Under a scenario where the Government of PNG elects to take up its maximum 30 per cent of the project, the respective joint venture interests would be PanAust 55 per cent, the Government of PNG 30 per cent, and Highlands Frieda 15 per cent. PanAust is responsible for 100 per cent of the costs incurred by the Frieda River joint venture to finalise a definitive feasibility study for PanAust’s development concept and will appoint and fund the cost of an independent expert to provide peer review. PanAust will also be responsible for 100 per cent of the costs to maintain the Frieda River project site, assets and community relations programs up to the point in time of lodgement of the Mining Lease or Special Mining Lease application.
As part of PanAust’s due diligence work, it completed a scoping study based on a smaller circa 24 million tonne per annum conventional open pit and flotation operation producing a copper-gold concentrate for export to custom smelters. Highlands Pacific managing director John Gooding welcomed the new partnership: “Frieda can be a great copper project for PNG, but developing it as a mega project as first envisaged 5-6 years ago by Xstrata would face a number of challenges given the current market environment. PanAust’s own reviews and studies on a project at approximately half the plant scale, but approximately a third of the costs proposed by Glencore, accords with our own long held views.
“We are very pleased to have PanAust as a substantial and supportive investor in Highlands and the placement means that Highlands’ funding position is robust going forward. We know the PanAust team well and have great respect for their skills in South East Asia and believe they can make a positive contribution to the Frieda River Project and to PNG.”
“With Highlands now holding 100 per cent of its Star Mountains exploration licences we can also look to develop new work programmes and collaborate with potential joint venture partners on these important exploration assets,” he said.

The Post Courier
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