By Epherems Joseph
Papua New Guinea-focused gold explorer Tolu Minerals Ltd (ASX: TOK) hit the boards last November in an oversubscribed IPO, raising over $A17 million at 50 cents per share, participating in what it calls the “renaissance” of the PNG mining sector.
The company has secured a valuable portfolio of assets, including the historically operated, fully permitted, high-grade Tolukuma gold-silver mine, a substantial package of adjacent exploration licenses on the Tolukuma epithermal structure and the earlier stage Mt. Penck epithermal gold silver copper exploration license.
Currently, Tolu shares are trading steadily on the bourse, hitting as high as A$0.56 today, up 10% from the IPO offer price (Figure 1).
Figure 1: Share price chart for Tolu Minerals Limited. (Source: Listcorp)
Tolukuma Gold Mine - the engine of the business
The business's driving project is the Tolukuma Gold Mine project (TGM), situated in the Goilala District of the Central Province of Papua New Guinea, about 100 km north of the capital city, Port Moresby.
The project consists of a mining lease, six current exploration licences and an exploration licence application, all in the immediate area surrounding Tolukuma for a total land holding across the Tolukuma epithermal structure of approximately 1,800 square metres (Figure 2).
Figure 2: Tolukuma mining lease ( Source: TOK website)
Exploration strategy
Tolu’s exploration strategy aims to increase and improve the resources of Tolukuma and the Tolukuma structure, including:
upgrading existing resources by an intensive ore development and face sampling programme;
a significant resource drilling program within the existing mining lease;
exploration on the adjacent exploration licenses to determine the potential for a significant expansion and long life of mine strategy based on existing and targeted mineralised structures.
The company recently kicked off its maiden diamond drilling program at the highly prospective Taula gold and silver epithermal vein system after completing last year’s successful Taula trenching and sampling program. (Figure 3)
Figure 3: Tolu’s exploration targets and interpreted gold mineralised veins ( Source ASX release )
Looking ahead
The funds raised from the IPO are helping the company:
refurbish specific Tolukuma Gold Mine infrastructure, including the new access road, the existing hydroelectric power station, pumping and other mine support infrastructure;
increasing confidence in the existing mineral resource estimate;
early start, targeted exploration at Tolukuma Gold Mine;
exploration on a portfolio of prospective, adjacent exploration licenses; and
recommence exploration on the Mt Penck gold/copper project.
A Word From Samso
Papua New Guinea is a tough place to make things work. I was there around 2011 and 2012, and we found it challenging. The Tolukuma mine has been around for decades, and its prospectivity is well known and, I assume, well understood. The grades are attractive, but my burning question is, why has it not been done?
I can see that the raise appears to be moving in the right direction regarding the amount of money required to make things move in PNG. PNG is an expensive place to live and work. Westernising or modernising your workflow is not cheap. Anyone who has worked in PNG would certainly confirm this, so I will be looking at how the company progresses.
It is gold, and the gold is there, there is no doubt. This is definitely a watch-and-see proposition, and a strong, committed DYOR is recommended.
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