Kainantu Resources Ltd (KRL), an Asia-Pacific focused gold junior mining company, has reported consistently high-grade results of up to 1.55 grams per tonne (g/t) of gold, 0.39% of copper, 20.8 g/t silver, and 460 parts per million (ppm) of molybdenum from the Ontenu Prospect within its KRL South project in Papua New Guinea.
These positive results were from KRL’s geochemical analysis from its initial field work in the first half of 2022.
The company identified several potential mineralized porphyry complex and intrusion targets around Ontenu, which is a gold-copper rich area based on past exploration results.
KRL said Ontenu has the potential to produce extensively bulk higher-grade mineralization, making the area a primary focus of the company.
The Ontenu site is about 15 kilometers east of the Tirokave area of interest, where KRL continues exploration activities, and 27 km southwest of K92 Mining Inc.’s operations — all of which are situated on the Kainantu Transfer Structure, a territory with abundant gold and copper mineralization.
Canada based and listed KRL engages in exploration primarily in gold, secondary in copper. Its prospective gold-copper projects are located in premier mining regions in Papua New Guinea, which are the KRL South, KRL North, the May River project, and the recently acquired Kili Teke project.
Gold’s Short-Term Momentum; Copper Seen In-Demand Due to Clean Energy Push
Both gold and copper have shown growing demand— gold benefits from recent bank failures and rising inflation rates, while copper determined as a critical metal is seen to face deep shortages and demand in the coming years due to the global clean energy push.
Jordan Roy-Byrne CMT, MFTA, technical analyst and editor-publisher of The Daily Gold, said that gold may recover for a while in response to the Federal Reserve opting to cease its rate hikes, in observance of the recent bank runs. This gives way to relatively high inflation, causing investors to turn to safer assets like gold.
But this positive trend might hit a pause, waiting on three key indicators to signal future price moves: gold holding above its US$1,950 resistance level, gold’s performance against the stock market, and its performance against foreign currencies.
If prices closed above US$1,953 by the end of March, it will mark the highest quarterly close ever and the highest monthly close in almost three years, Roy-Byrne said. Gold was at US$1,977.84 per ounce at the time of writing.
In addition, gold made its second highest close ever against foreign currencies on March 15, and third largest close against the stock market in the last two years. If this continues, the technical analyst said “gold should be on its way to the August 2020 high” at US$2,075/oz.
“If Gold cannot surpass US$1,950 and the stock market plunges, silver and mining stocks could get hit one last time. On the other hand, if gold can break US$1,950 to US$2,000 relatively soon, then the gold stocks and silver will follow. They will strongly outperform when gold breaks US$2,100,” Roy-Byrne said.
Meanwhile, a Bloomberg article stated that copper is seen to experience robust demand, driven by infrastructure spending, and the ramping up of renewable energy development and electric vehicles manufacturing around the world.
Copper production will need to almost triple by 2040 to meet the surge in demand for renewables and EVs, and to hit targets for net-zero carbon emissions. This will lead to copper price increases by around 15% to over US$10,000 a ton.
Why KRL?
Gold expert Bob Moriarty said KRL has very bright prospects of landing major and high-grade gold producing mines in Papua New Guinea, given that it has project sites adjacent to K92 Mining’s renowned and premier Kainantu mine. KRL’s geophysical survey confirmed the high-grade epithermal and porphyry mineralization extending northeast from the K92 property onto the KRL North Project.
K92’s Kainantu copper-gold mine was able to record over 5 million gold equivalent ounces (oz Au eq) of resource, and produced 104,000 oz Au in 2021, for only US$856/oz in sustaining costs which is well below the industry average.
Moriarty came out with a Buy recommendation on the junior mining company, seeing a good growth story in the horizon for KRL much like K92, given that the Kainantu was one of the best exploration success stories in recent years.
He said the same for KRL South, with the positive results of possible skarn mineralization from the Ontenu prospect as well as the Tirokave target.
With the recent acquisition of the Kili Teke copper-gold porphyry project from Harmony Gold Mining Co., also located in Papua New Guinea, KRL can benefit from its copper potential, as well as high-grade gold resource once the company “re-optimizes” the mine site. They will do this by drawing on the skarn ore body closer to the surface.
The company is going for a “long-term portfolio approach.” The management is always on the lookout for exploration projects in Papua New Guinea, and has experience in mining in other Asian countries, such as the 3 million oz Au eq Toka Tindung mine in Indonesia.
Despite not having the full support from Kainantu locals initially, KRL has spent over a year building trust by consulting with local communities, establishing rapport necessary for building long-term access.
The Catalyst: KRL North, KRL South, May River Drill Programs to Start This Year
KRL conducted geological, geochemical, geophysical surveys and analyses in KRL South Ontenu prospect to produce zone maps that will help them in vectoring towards drill targets. The company said it will “move towards a focused drill programme in the near term” for KRL South, or first half of 2023.
Based on the figure, KRL will prioritize targets O5 and O6 as possible mineralized porphyry area. These are the concentration spots for detailed drilling and exploration in KRL South this year.
“The company views the Ontenu area as extremely encouraging for potential economic Cu-Au-Ag-Mo mineralization at KRL South,” KRL said, adding it will conduct regular social awareness and community engagement to support field work starting the first half of 2023 onwards.
According to the company’s latest CEO Report, further geochemical analysis and field work in the southwestern part of KRL North, near the K92 border, is ongoing. The company is set to start drilling in four to five targeted areas of KRL North within the first half of the year.
KRL is currently closing the May River and Kili Teke deals to have full ownership of the two projects. Once done, the company plans to go ahead on its targeted drilling in the May River project also within this year. For Kili Teke, KRL is also advancing the infrastructure access road through Hela province.
Ownership and Share Structure
Board and management hold 48% of the Canada based and listed company, while its partner Asia Pacific Energy Ventures has 27% interest and independent investors own 25%.
According to MarketWatch, KRL has a market capitalization of CA$5.22 million with 54.94 million shares outstanding, and 27.14 million public float shares. The stock trades within the 52-week range of CA$0.07 to CA$0.08.
KRL reported US$145,000 cash in the bank as end-September last year, but has raised fresh capital last January -- for a total of CA$2.5 million -- to finance drilling activities in KRL North, KRL South and May River projects this 2023.
