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Pacific Niugini Moves To 65% Ownership Of Halls Creek Gold Project

Pacific Niugini (ASX:PNR) can now lay claim to ownership of 65% of the Halls Creek Project in Western Australia.

PNR could pour the first gold from the Nicolsons mine in 2015, with total pre-production Capex estimated at just A$10.7 million.

NPV and IRR metrics are impressive and highlight how robust the project economics are for Nicolsons.

Total sustaining cost is estimated at A$854 per ounce while capital P&E cost is expected to be about A$107 per ounce.

It has also declared a maiden Mine Reserve of 435,455 tonnes at 6.17 grams per tonne gold for 86,362 ounces of gold.

PNR and Bulletin Resources (ASX:BNR) are progressing with a project development plan designed to achieve the commencement of project construction and refurbishment in early 2015.

Production would then be expected to kick off around six months after initiation of mining activities.

Farm-in details

PNR is farming in to the project, and BNR has now provided transfer documents for a further 16% of all tenements.

PNR now has until April 2016 to spend a further $1.2 million in order to attain 80% ownership of the project. The company expects to attain 80% ownership of the project prior to the commencement of production.

Key takeaways

- Net Profit (after-tax) of A$50 million (at an assumed gold price of A$1,400 per ounce);

- NPV (8%) of A$42 million;

- IRR of 162%; and

- Initial mine life of 4.5 years, including 6 months of pre-production activities.

Re-start Estimates

The company's re-start estimate demonstrates a robust project with modest capital requirements and strong operational cashflows targeting 130,000 tonnes per annum.

This is focused on restoring the existing on-site processing plant at its current capacity.

The mine plan involves the development of a small scale underground mine from the base of the existing open pit.

Process plant and mine operators are to be directly employed by PNR, and underground mining equipment is to be dry hired for initial operations, minimising pre-production capital as far as practicable.

Total recovered gold is estimated at about 106,000 ounces.

The estimate was developed by an owner's team working closely with expert industry consultants.

Key consultants involved in development of the mine plan include:

- CAD Group: Processing and electrical;

- AMC Consultants: Geotechnical;

- RGeo Services: Resource Modelling;

- Clarke Lindbeck and Associates: Environmental and Permitting;

- Rockwater Pty Ltd: Hydrology; and

- Metallurgy Matters: Metallurgical.


Pacific Niugini now owns 65% of the Halls Creek Project and has received the relevant transfer documents.

The company is also well on the road to move to 80% ownership, as it moves forward to first gold production six months after start of mining.

With Capex a very modest A$10.7 million and Opex at A$854 per ounce, the project looks likely to be one of the success stories in the gold sector in 2015.

Based on successful mine re-start and production ramp up, Proactive Investors has calculated a share price target for Pacific Niugini of $0.25 - $0.30 per share within 12 months based on gold production, forecast profits and EPS estimates.

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