Gold Mining Company Seeking Investment to Expand in Papua New Guinea

Opportunity Snapshot

Investment Opportunity

Investment is sought to increase the capacity of the current gold mining operations. 2 options are available to investors - US$1.5 million and US$8.5 million.

Established mining company with an excellent licence portfolio and a promising pipeline:

• Existing 24 Alluvial Mining Licences (AMLs) covering an area of 105 hectares
• A further 30 Alluvial Mining Licences Applications (AMLAs) awaiting final approval covering an area of 138 hectares
• An exciting Exploration Licence in the same region as the AMLs covering an area of 660km2

Investment is required for the establishment of a new plant in Papua New Guinea.

The current mining operation is on target to be self-sustaining after three months of operation. It has successfully proved the viability of gold mining in the licenced areas thus substantially reducing the risk for further investment.
A fully formed foreign owned company has been established with all banking facilities, licences and contracts in place to sustain a large mining operation over the next fifteen years.
All necessary infrastructure has been developed to support the enlarged mining operation
Proven procedures have been put in place to ensure an efficient running of the operation both from an operational perspective and a financial perspective.
Relations with the local community have been established and developed to ensure the success of the project
A large security team has been trained and established to support the larger operation.
Environmental monitoring and procedures have been put into place to comply with all local legislation and the support of the community.

There will be a six month period from the receipt of funds to operational status comprising of a build time of three months, a delivery time of two months and an onsite construction time of one month.

Competitive Advantage

Excellent country knowledge and established relationships:

• One of the few wholly foreign owned companies in PNG
• A large and encouraged movement of foreign investment in PNG
• An excellent standing and reputation with government departments, local authorities and land owning companies

Efficient operations run by an experienced management team

• Proof of being able to effectively manage costs
• Management has been working in PNG for over two years and have substantial experience in operating in various different countries including Russia, Morocco and Venezuela

Current mining operations enable the project owner to be well positioned for growth:

• Solid foundation for growth given existing self-sufficient operations at 3.5kg per month
• Existing infrastructure, team and operational knowledge to support expansion into larger scale operations in short order
• Limited operational risk presented by expansion plans due to existing proven resources and operations

Rationale for the deal

High barriers to entry:

• Relationships with government departments, local authorities and local communities critical for winning new licences
• High start-up costs prohibit new market entrants without sufficient capital backing
• Established management know-how to address the inherent complexities of operating in PNG

An attractive market place with substantial proven mining resources:

• Gold is a safe investment, particularly during a turbulent macroeconomic climate with demand forecasted to continually increase
• A number of substantial proven successful mines across PNG
• The Minerals Tenement administration system used by the Department of Mining provides the investor a relatively high degree of security over their investment, much greater than most mining countries
• Competitive fiscal regime that operates under terms and conditions similar to Western countries

Use of financing

US$1.5 - 8.5 million investment is needed to increase the capacity of the current gold mining operations by Manufacturing a mining plant capable of mining 150 m3 or 500 m3 of earth per hour.

Opportunity for the investor

Full return within 18 months of operations based upon recovery at an average grade of 0.3 grams per tonne operating 21.5 days per month for 16 hours per day

Possible finance options are:
• Convertible Structure
• Equity
• Revenue Sharing
• Financial lease
• Loan

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