qrl article: the australian

Mining giant may hold key to PNG highlands project

FLOAT WATCH: Tim Morris
From:The Australian
September 07, 201112:00AM


The company's withdrawal in the late 1990s followed an environmental disaster at its Ok Tedi copper mine. Early closure of the operation was considered. However, in the face of government opposition, BHP instead gave its shareholding to the local community.

The PNG Sustainable Development Program now oversees BHP's former interest in Ok Tedi and receives all dividends that would otherwise have flowed to the mining giant. While distributions to local communities have since reached $1.5 billion, damage to surrounding river systems is much harder to quantify.

Commenting on BHP's renewed interest in exploration in PNG, the country's Mining Minister John Pundari echoed misgivings earlier this year.

"I personally find it very difficult to allow the return of BHP Billiton into this country, given its legacy with the Ok Tedi mine project," he said.

Whether time heals these wounds could have implications for the recent float of Quintessential Resources.

The junior exploration company is focused solely on PNG and its primary asset is surrounded by tenure that is at present in the hands of BHP. Known as Bismark, this project could see increasing interest as BHP attempts to regain local favour.

Aside from its monolithic neighbour, the Bismark project's prospective nature is highlighted by an existing gold resource of 35,400 ounces.

Accessible only by air, Bismark's remote location in PNG's highlands will require a much larger discovery to support an economic mine. Investors may not have to wait long for further clarity on the project's exploration potential, however.

Soon after listing, Quintessential aims to oversee Bismark's first drilling program in 17 years. In the event of discovery success, the company's capital structure is conducive for a share price re-rating.

In the interim, valuations now ascribed to more advanced regional peers should offer inspiration for speculative investors.

COMPANY: Quintessential Resources Ltd
ASX CODE: QRL
SHARES OFFERED: 30 million
LISTING PRICE: 20c
CURRENT PRICE: 28.5c
MARKET CAPITALISATION: $12m (fully diluted)
LISTING DATE: August 9