Otterburn Resources reported in mid-March that its subsidiary K92 Holdings has completed the purchase of Barrick Kainantu Ltd. from Barrick Gold. The key asset associated with the purchase is the currently shutdown Kainantu gold mine in the Eastern Highlands of Papua New Guinea (PNG). The purchase price could total $62 million, depending on the project reaching certain development milestones.

K92 made an initial deposit of $2 million upon completion of the purchase agreement. Subsequent earn-out payments are subject to a term of 10 years and depend on future exploration success for indicated resources and/or ounces mined, contingent on a 1-million-oz gold equivalent threshold. Current Kainantu measured and indicated resources total 360,000 gold equivalent oz.

If K92 exceeds the threshold of 1 million gold equivalent oz within 10 years, Barrick will receive $20 million. Additional amounts will be paid at the same rate of $20/oz up to a maximum of $60 million.

Fully developed infrastructure at Kainantu includes underground mine development, a mill processing facility, staff housing, a life-of-mine tailings pond, and office space. The site has a dedicated power line from the nearby Yonki hydro-electric facility and is accessible via a paved road.

K92 currently has approximately 70 staff on site at Kainantu, most of whom were previously employed by Barrick, along with several North American, Australian, and South African geologists and engineers. Current work at the project is focused on detailed mine planning and plant engineering studies.

An “independent” technical report and resource estimate dated March 6 stated that “Barrick originally purchased the Kainantu project for the porphyry copper-gold potential, and internal reports rank the project very highly on a global scale. The decision to divest the project was made for corporate rationalization reasons based on global competition for exploration expenditure rather than geological reasons.”

A key component of the report is an inferred mineral resource estimate for the Irumafimpa-Kora gold-copper deposit of 1.84 million oz at a grade of 11.6 g/mt gold equivalent. Historic drilling on the project has outlined numerous other high-grade gold targets, some with unclassified historic resources.

Upcoming activities for Kainantu will include refurbishment of the mill and Irumafimpa mine underground infrastructure and extensive definition and exploration drilling.

Otterburn Resources is a Canadian company headquartered in Vancouver, British Columbia.