WCB hunts gold, copper elephant on Misima Island

VANCOUVER — When big-time global miner Xstrata PLC (XTA-L) put its US$5.3-billion Frieda River copper project in Papua New Guinea on the market in late June, there were a few raised eyebrows at the state of affairs in the small Melanesian country — especially given recent resource nationalization concerns in nearby Indonesia. But ask WCB Resources’ (WCB-V) president and CEO Cameron Switzer about Papua New Guinea and he will talk about the potential for world-class copper-gold deposits and the presence of a skilled labor force ready to support regional development.

In late December WCB agreed to an exploration farm-in agreement with Pan Pacific Copper (PPC) — a Japanese joint-venture involving JX Nippon Mining and Metals and Mitsui Mining and Smelting — for the 180-sq.km EL1747 mineral concession on the small island of Misima, 200-km-southeast of New Guinea.

Under the option agreement, WCB must spend A$1 million during its first year to earn 30% in the project, followed by a penultimate investment of A$3 million to earn an additional 19% in year two, and a final expenditure of A$5 million in year three to earn its full 70%. PPC also retains a mineral off-take agreement hinged on prevailing metal prices.

“The important thing to realize is the geological pedigree of Misima Island,” Switzer explains during an interview. “It is a historic producing area, and more importantly it is located in what I like to call the ‘land of elephants’.  If you look at some of the similar projects to the west you can see why we’re excited about its prospects. We think we have something that has a lot of the features that would suggest we’re onto something pretty special.”

When Switzer mentions elephants in WCB’s neighbourhood, he is referring to world-class deposits like Freeport-McMoRan Copper & Gold’s (FCX-N) Grasberg copper-gold operation, and the monstrous Wafi-Golpu gold project controlled by Newcrest Mines (NM-T, NCM-A) and Harmony Gold (HMY-N) in Papua New Guinea.

Misima was previously home to an open-pit, gold-silver mine operated between 1990 and 2001 by Placer Dome — acquired by Barrick Gold (ABX-T, ABX-N) in 2006 — which produced 4 million oz. of gold and 20 million oz. of silver before its closure due to low metal prices.

Switzer says the infrastructure has been disassembled and moved, but WCB still maintains access to a deepwater port that makes shipping in heavy gear and machinery a breeze. In early June the company received welcome news when the historic open-pit, held under Special Mining Lease 1 (SML), was merged into its existing mineral license,

“Our indications and discussions with people who have been involved in the project is that the mineralization in the historic pit is open at depth and along strike in a number of directions,” Switzer comments. “We’re trying to source the appropriate database at the moment, but the old mine is a real easy win for us. It’s definitely our top priority, with a focus on the bigger auxiliary targets afterward.”

WCB has already established three additional targets via rock chip and soil sampling that it says are prime for further exploration. The company suspects Misima may lie on a world-class mineral belt that hosts geological elements akin to major copper-gold porphyry systems,

“Our belief is that like many of the other major and significant gold deposits you see around the world, there is that strong spatial association between gold and big porphyry copper deposits at depth,” Switzer says. “That is what we think we’re dealing with at Misima. The issue we’ll likely face is that we’re going to have so many good targets, especially following the acquisition of the SML area.”

WCB’s three Greenfield targets include: Quartz Mountain, Porphyry 2, and a northern gold zone called Boiuo. Surface data has demonstrated copper, lead and zinc distribution as well as high silver content.

WCB collected a total of 2,487 auger ridge and spur soil samples thus far, encountering coherent zones of greater than 500 parts per million (ppm) copper and several areas in excess of 1,000 ppm copper, with a peak grade of 0.31% copper and 2.6 grams gold per tonne.

“We established three high-order anomalies with the surface sampling,” Switzer explains. “Quartz Moutain is defined by impressive molybdenum, lead and gold results. We also have the target we’re interpreting as a ‘classic island arc’ porphyry, which is exciting due to the sheer size and tenor of copper and gold anomalism. The third target to the north was a surprise, though it shares similar geochemical character with previously mined deposits on the island.”

When it comes to infrastructure Misima Island has a single dirt road. The major settlement — called Bwagaoia — is home to roughly 1,000 people and receives power from a local 420-kilowatt hydro dam. According to Switzer one of the underrated benefits of the Island is its mining history. Many of the local population still makes use of a commercial airstrip to work at major mining operations in the South Pacific, so finding skilled labor has turned out to be a fairly straightforward ask.

“As far as Papua New Guinea is concerned we’re full-speed ahead. It’s rooted in the Westminster system and there is a clearly defined mineral resources act based on an Australian analogue,” Switzer comments when asked about local conditions. “We’re happy with that. The landowners on the Island have been tremendous — they’re very approachable and friendly. It’s all quite clear and transparent.”

WCB joins a barrage of Australian-based exploration outfits looking to make the jump to the Toronto Stock Exchange (TSX) in order to raise awareness and eventual funding for ongoing exploration work. The company closed a competitive private placement with Casimir Capital in late March, issuing 2.8 million shares at 75¢ per unit, raising US$2 million. WCB also negotiated a relatively low commission structure, paying only 6% cash and 6% broker warrants for the transaction — financing fees have jumped notably in a tightening market.

“The financing reflects our asset value; we’re a smaller company with big aspirations, and big targets behind us to back us up,” says Switzer.

WCB maintains an early-stage equity structure with only 21 million shares outstanding and a $10-million market capitalization. The company has traded within a 52-week range of 8¢ and 97¢, having moved as high as 70¢ since May, but closing at 48¢ at presstime on 10,000 share volumes.