Star Mountains, PNG
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17 January 2013 New Discovery - Star Mountains, PNG Kum Kom Hole 1 drilling results include copper-gold skarn mineralisation • 22m @ 1.42% Copper & 0.57g/t Gold from 146m down hole • 10m @ 0.68% Copper & 0.21g/t Gold from 220m down hole • 68m @ 0.97% Copper & 0.37g/t Gold from 280m down hole Highlands Pacific Limited (ASX: HIG) is pleased to report assays from the first hole at the Kum Kom prospect in the Star Mountains in Papua New Guinea that highlight the potential for another copper-gold porphyry-skarn system just 5 km north of the Olgal porphyry identified in 2012 that contained a 596 metre intersection of 0.61% copper and 0.85g/t gold. The Kum Kom prospect approximately 25kms northeast from Ok Tedi copper mine is the fifth prospect drilled by Highlands in the Star Mountains, the fourth that has encountered copper porphyry mineralisation and the first with skarn-style alteration - often associated with higher grade copper-gold zones. Assays have been received for the 354 metre diamond core hole at Kum Kom (001KUM12) and assays are pending for a further 480 metre second drill hole (002KUM12) from the same pad position but in the opposite direction. Assays for this first Kum Kom drill hole show an initial lower grade zone to 140 metres before a high grade alteration zone of 22 metres of 1.42% copper and 0.57 g/t gold. Deeper drilling in the same hole below 280 metres encountered a second zone of 68 metres at 0.97% copper and 0.37 g/t gold before drilling ended still in mineralisation. The hole ended due to the drill hole collapsing while the drilling contractors attempted to recover a length of drill rod lost down the hole. Drilling in the Star Mountains was suspended in late December due to an unseasonal dry spell which prevented fuel and food supplies being shipped to the Ok Tedi supply town of Tabubil. Some recent rains have improved the river depths and it is expected a logistical backlog will be overcome soon with drilling in the Star Mountains to recommence in February. In the meantime drilling pad construction and exploration preparations have continued. Managing Director of Highlands Pacific Mr John Gooding said today: “This is another highly encouraging discovery, highlighting the potential copper-gold systems that exist in this important new district. It is still early days and we need to drill more holes at Kum Kom while continuing to explore at more of our untested targets in the Star Mountain district. The reason why we are excited about the identification of skarns is twofold - first their high-grades make them more economically attractive in their own right and second they can be an indicator of the potential source or host part of the porphyry system.” For more information on Highlands’ Star Mountains exploration see the presentation lodged with the st ASX on 1 November 2012. For further information, please contact: Media Enquiries to: John Gooding or Craig Lennon Simon Jemison Highlands Pacific - 07 3239 7800 c/. Collins St Media - 03 9224 5319 1 | Page FIGURE 1 – KUM KOM DRILL HOLE LOCATIONS TABLE 1 - KUM KOM DRILL HOLES Hole North East Level Azimuth Dip Total Depth (m) 001KUM12 9444780 538025 2900 180 -70 354 TABLE 2 - KUM KOM ASSAYS Interval Cu Au Core Hole (at 0.2% cutoff) From To (m) (%) (g/t) Recovery % 001KUM12 2 4 2 0.21 0.03 50 130 132 2 0.69 0.29 85 140 170 30 1.11 0.45 87 (including at 0.5% Cu cut off) 146 168 22 1.42 0.57 90 214 240 26 0.46 0.14 95 (including at 0.5% Cu cut off) 222 232 10 0.68 0.21 97 250 256 6 0.22 0.07 96 266 354 88 0.82 0.31 97 (including at 0.5% Cu cut off) 280 348 68 0.97 0.37 99 The Kum Kom prospect is located on the EL1312 Nong River which is about 250 sqkm in size. Highlands has spent over US$20 million on this lease to date. Highlands currently owns 100% of this lease with Xstrata Copper having the right to reclaim a 72% interest by paying Highlands three (3) times the expenditure incurred by Highlands at the time Highlands presents a Pre-feasibility Study. There are no time deadlines on when Highlands must produce a Pre-feasibility Study to Xstrata Copper. If Xstrata elects to reclaim this interest they must then complete and fund a Bankable Feasibility Study by 2019 to maintain their interest. 2 | Page FIGURE 2 – STAR MOUNTAINS, PNG - PROSPECTS TABLE 3 – STAR MOUNTAIN DRILLING PROGRAMME – PAST, CURRENT AND PROPOSED Prospect Status Holes Drilled Comment Olgal Drilled 14 Copper porphyry identified Futik Drilled 4 Low grade copper porphyry mineralisation Pad48 Drilled 3 Low grade mineralisation Rattatat Drilled 2 Low grade copper porphyry mineralisation Kum Kom Currently Drilling 2 Skarn style mineralisation identified Tuk Currently Drilling 1 Drilling incomplete Unfin Planned for 2013 Bumtin Planned for 2013 TABLE 4 - OLGAL PROSPECT – PREVIOUSLY REPORTED IN 2012 DRILLING Hole North East Level Azimuth Dip Total Depth(m) 0140OLG12 9439981 539659 2286 0 -90 630 Interval Cu Au Core Hole (At a 0.0% Cu cut off From To (m) (%) (g/t) Recovery % 0140OLG12 24 620 596 0.61 0.85 83 3 | Page The following statements apply to the Star Mountains exploration results and exploration targets: (1) Mineralised intersections are quoted as down hole widths. The porphyry mineralisation occurs as disseminations and vein stockworks. Drill intersections described in this report are based on core lengths and may not reflect the true width of mineralisation. (2) Collar locations are in UTM Zone 54 co-ordinates using the AMG66 horizontal datum. Azimuths are given relative to grid north. (3) Drill core is PQ, HQ or NQ size. (4) Assays were carried out on half sawn core. The half core is crushed and pulverized to ~ 180 mesh. 200 gram samples are used for assay. QAQC control samples make up approximately 10% of each batch sent for analysis. The unused half core is stored on site. (5) Samples were analysed at ALS-Chemex in Townsville. Gold is by 50g fire assay and copper by ICP-AES on an aqua regia digest. Samples assaying greater than 0.5% Cu are re-assayed using an ore grade method suitable for higher grade samples. (6) Hole positions are based on surveys of the drill pad. Actual collars are within 10m of stated locations. The Potential quantity and grade related to Exploration Targets in this report is conceptual in nature as there has been insufficient exploration to define a Mineral Resource. It is uncertain if further exploration will result in the determination of a Mineral Resource. These exploration target tonnes and grade ranges are considered realistic because they are well within the typical size and grade ranges expected for porphyry copper deposits in this and other south west Pacific island arcs, and are consistent with data for the known porphyry copper deposits already located in Highlands’ Star Mountains tenements. Competent Persons Statement: The exploration results and exploration targets reported here are based on information compiled by Mr L.D. Queen who is a member of the Australasian Institute of Mining and Metallurgy, and who is employed by Highlands Pacific Limited. Mr Queen has sufficient experience relevant to the style of mineralisation and the type of deposit under consideration, and to the activity which he is undertaking, to qualify as a Competent Person as defined in the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, The JORC Code 2004 Edition”. He consents to the inclusion in the report of the matters based on the information compiled by him in the form and context in which it appears. 4 | Page About Highlands Pacific Limited Highlands Pacific is a PNG incorporated and registered mining and exploration company listed on the ASX and PoMSoX exchanges. Its major development assets are the US$1.5bn Ramu nickel cobalt project and the Frieda copper gold project; with exploration in ASX Code: HIG progress on the Star Mountains (Nong River, Mt Scorpion and PoMSox Code: HIG Tifalmin) licenses approximately 20km north of the Ok Tedi mine. Shares on Issue: 789 million Highlands also has exploration tenements in the Wau/Bulolo area, Options on Issue: 19.9 million close to the new Hidden Valley and Wafi gold projects. Performance Rights: 7.6 million Star Mountains Prospects* Market Capitalisation ~ A$120m The Star Mountains exploration tenements, which include Nong River Cash on Hand (31/12/12) A$14.5m EL1312, Mt Scorpion EL1781 and Tifalmin EL 1392, are located approximately 20km north of the Ok Tedi mine, in Western Province, Directors Ken MacDonald, Chairman PNG. They lie within the highly prospective New Guinean Orogenic John Gooding, Managing Director Belt, which hosts the Grasberg, Ok Tedi, Porgera and Hidden Valley Mike Carroll mines, as well as the Frieda deposit. An exploratory drilling program Dan Wood is underway at Star Mountains. Drew Simonsen Bart Philemon Ramu Nickel Cobalt Mine Ross Garnaut The Ramu nickel mine is located 75km west of the provincial capital of Madang, PNG. The mine is currently being commissioned with the Management first shipment of product having been completed in November 2012. Craig Lennon, CFO &Co.Sec Highlands 8.56% interest in Ramu will increase to 11.3% at no cost to Larry Queen, Chief Geologist Highlands after repayment of the project debt (estimated to take 8 Peter Jolly, GM Projects years). From commissioning, Highlands has access to its pro-rata Ron Gawi, GM Port Moresby 8.56% share of Ramu’s post-debt servicing, net cash flow.