My last trip of 2013
may have been the most rewarding. I flew to Papua New Guinea in early December.
The trip itself was pretty brutal but it made the project more interesting. My flights
from home to PNG totaled 30 hours of travel and back 4 days later I did another
28 hours. I picked up a bug en route and it laid me on my back for three days.
It’s all part of being part of the jet set; long hours and the flu.
The company I went to
see is called WCB Resources (TSXV: WCB)
and they have a major gold rich copper porphyry on Misima Island in Eastern
PNG. So far they have got it exactly right and are well on the way to owning a
major piece of a company-making project.
I thought I was familiar
with the name of the island, Misima. I had just finished a great book written
about the battle of the Coral Sea in 1942 on the trip over. The carrier battle
between the forces of Japan and those of the U.S. in the Coral Sea between the
Solomon Islands and PNG was the first sea battle in history where the ships
never came within sight of each other. Japan was moving their troops into a
position to occupy Port Moresby so they could attack Australia. The U.S. wanted
to block the Japanese.
Japan lost one carrier
and had another severely damaged. The U.S. lost the Lexington and had severe
damage to the Yorktown. Along with the Battle of Midway only a month later,
Japan was contained and lost every battle from then on. I didn’t realize until
my visit to Misima Island for WCB that the Japanese carriers were only 20-30
miles north of the island during the battle.
Gold mining began on
Misima Island after its discovery in October of 1888. It was the second gold
discovery in PNG. Placer mining on a small scale has taken place since that
time and continues today. Hard rock mining has taken place on Misima for almost
100 years and the first railroad in the country was an 11.5 km link between the
gold mine and the harbor.
Placer Pacific/CRA
operated a gold mine where WCB is now exploring between 1989 and 2004 producing
over 4 million ounces of gold and 20 million ounces of silver. They began mine
closure in 2001 even though their drilling revealed a rich copper/gold deposit.
But copper was a mere $.65 a pound so they walked away after reclaiming the
property in 2004.
WCB entered into a JV
with Pan Pacific Copper in December of 2011 and began ground operations in
2012. The JV is probably the most interesting I have seen. Pan Pacific Copper
(PPC) is owned 66% by JX Nippon Mining and Metals and 34% by Mitsui Mining and
Smelting. Both companies want copper production to feed their smelting plants.
They do not want to do exploration. WCB on the other hand has no interest in
production, they want to explore.
The JV between PPC and
WCB calls for WCB to spend $9 million (AU Dollars) over a four-year period.
When WCB spent the first $1 million, they earned a 30% interest in the project.
They now have another year to spend $3 million to earn 19% more and can earn
another 21% bringing them up to 70% by spending $5 million more in exploration.
It’s a sweet deal for
both companies. WCB company president Cameron Switzer pulled one coup by
locating and buying the drill data from Placer Pacific. That’s $100 million
worth of drilling data. In addition, the project already has a JORC [Joint Ore
Reserves Committee] resource of 1.57 million ounces of gold and 8.5 million
ounces of silver.
The main deposit is a
classic Island Arc Copper Porphyry called the Misima Porphyry prospect. It
measures 1100 meters by 800 meters and is a high-order copper-gold anomaly with
multiphase veining and intense fracturing.
WCB believes the
project most closely resembles the giant Wafi-Golpu deposit owned by Newcrest
Mining and Harmony Gold but the entire area finds home to many giant
copper/gold projects. Grasberg is on the same island with some 24 million
tonnes of copper and 82 million ounces of gold; Batu Hijau is nearby with 7.2
million tonnes of copper and 18 million ounces of gold. Newcrest has the Lihir
Gold mine in production on New Ireland with production of 650,000 [corrected]
ounces of gold a year and the Hidden Valley mining hoping to produce 250,000
ounces of gold yearly and 2.5 million ounces of gold once full production is
achieved.
The Misima gold project
consists of three parts. The elephant and primary target is the Misima porphyry
prospect. Aeromagnetic data shows a large zone of magnetite alteration under
the 1100 by 800-meter zone. It is a classic Island Arc porphyry.
The Umuna Zone contains
a resource of 1.57 million ounces of gold and 8.5 million ounces of silver.
It’s a shear zone hosted epithermal gold deposit. It has not been fully tested
to depth or along strike. Recent channel samples conducted by WCB have extended
the zone an additional two km to the Northwest along strike.
What WCB calls the
Quartz Mountain is yet another distinct mineralization event similar to that
found at Wafi-Golpu. There are three zones of separate hydrothermal brecciation
with elevated gold and silver values associated with the open pit production
totaling about 250,000 ounces. The company interprets a large oval magnetic
high as potential porphyry mineralization.
In mineral exploration
serendipity plays a much larger part than anyone wants to admit. A lot of exploration
and mining is based on pure chance. Gold mining in PNG started in the islands
off the east end of PNG. Gold mining started at Misima Island in 1888 and
continues today. The island hosted one of the bigger gold mines on Papua until
2004. The island has been the center of training for miners for a hundred
years. When the mine shut down ten years ago, all those trained and skilled
workers were forced to move elsewhere.
I went to the mainland
of PNG years ago. Many parts of the country are not far from the days of
cannibals and headhunters. I went to a BBQ for a company that invited the
residents of two villages nearby. The men got liquored up and by the afternoon
were chasing each other with machetes. I wouldn’t visit mainland PNG ever
again. But Misima Island is totally different and peaceful. When this project
goes into production – and I believe they are on to something big and will be
going into production – all those local boys will want to come home to work.
WCB Resources with
their Misima Island project have put together the perfect package. It’s a JV
with the best of partners; guys with deep pockets who want the output of the
mine to feed their mills. WCB is holding $100 million worth of drill results so
they already have a keen idea of what they have and what they need to test. WCB
has passed the first phase of earning and now owns 30% of a project with a
43-101 resource of 1.57 million ounces of gold and 8.5 million ounces of
silver.
Of course, every silver
lining must have its cloud. WCB needs to raise money for drilling. Because it’s
an island far from infrastructure, they need to bring in a drill on a barge,
probably from Australia. But drills can be had and drillers are eager for work
right now. The mobilization costs will be high so WCB needs to raise $3-$5
million to poke some 1000 meter hole into the center of that copper porphyry.
However, as my readers
are well aware, I am convinced we have been in a bottoming process for 6 months
and the first couple of days of 2014 are confirming that the prices of
resources are rebounding. I see the general stock market topping and when
investors realize it was the sound of a bell ringing that they heard, money is
going to be a lot easier to raise.
WCB is not yet an
advertiser, they may well be. I did buy some shares as soon as I got back from
PNG so I am biased. As always, do your own due diligence.
http://www.321gold.com/editorials/moriarty/moriarty010614.html
WCB Resources
WCB-V $.30 (Jan 3, 2014)
35.3 million shares
WCB Resources website
Disclaimer: This
article was posted with the permission of a third-party contributor
and the opinions contained therein do not necessarily reflect
those of Smallcappower. Smallcappower does not endorse any investment
advice provided by these third-party contributors. Please consult
your investment advisor before making any investment decisions.
Ubika Corporation and its
divisions Smallcappower, Ubika Communication and Ubika Research are not
registered with any financial or securities regulatory authority in
Ontario or Canada, and do not provide nor claims to provide investment advice
or recommendations to any visitor of this site or readers of any content
on this site. – See more at: http://www.smallcappower.com/posts/small-cap-power-disclosure#.UoJQkZEq_vw
