Prior to becoming chief executive officer of Indochine Mining, Stephen Promnitz had no plans to return to Papua New Guinea and especially Mt Kare in Enga province.
Promnitz was a young exploration development geologist working for CRA (Rio Tinto) when gold was first discovered at Mt Kare in early 1988.
"Within a space of six weeks it went from no one onsite to 6000 people with picks and shovels," Promnitz told the PNG Report.
"It became a modern day gold rush and more than a million ounces was pulled out in nuggets in a space of 12 months."
The ensuing mayhem created by the gold rush saw CRA abandon the project in 1993. Promnitz moved on to work around the globe in projects spanning gold, copper, uranium, platinum and even coal before he later switched over to a successful resources-related finance and banking career.
He returned to mining in late 2005 as an executive for Thailand gold producer Kingsgate Consolidated. With a market capitalisation of just $A150 million when he joined, the company had a market cap of $1.3 billion by the time he left five years later.
"The Kingsgate team took the company from one that very few people knew about to one of the major gold producers listed on the ASX. Indochine has similar sorts of aspirations."
The global financial crisis provided Promnitz a rare investment opportunity to settle some unfinished exploration business from his past.
After years of sporadic drilling, the Vancouver-based owners of Mt Kare, Madison Minerals and Buffalo Gold, ran into difficulty during the financial crisis of 2008-09 and the project ended up in liquidation.
Successfully tendering in 2009, a PNG-based family captured the rights to Mt Kare at a time when hardly anyone was buying gold assets.
Indochine, which only floated on the ASX in December of 2010, later fully acquired the project. This move immediately set it apart from other new explorers.
"Indochine became one of the few junior companies to have listed and then acquired a significant asset of around 2 million gold ounces in one single deposit. The project had 365 drill holes when it was acquired," Promnitz said.
Indochine has since charged ahead, adding to the extensive drilling data acquired with the project. The explorer has reproduced a series of high grade drilling results.
Some of the best results came from twinned holes to corroborate past data, which most recently included a near surface 17.7m intersection grading 100.3 grams per tonne gold that featured a 4m interval grading 420gpt gold.
One of the top considerations for any serious resource stock investor is the strength of management. This factor alone can often determine the success or failure of a project regardless of its quality.
Two appointments over the past year stand out. The first is Indochine country manager and Mt Kare project director George Niumataiwalu.
Essentially this is the man behind PNG's newest gold mine, Hidden Valley in Morobe province.
Niumataiwalu had full management control of the project in 2002 and within two years had completed a feasibility study plus struck a vital landowner agreement for mining rights.
After receiving the mining licence and environmental permits, the company was considering financing options for mine development when South African gold giant Harmony Gold came along with an offer too good to refuse.
This acquisition in 2005 included the exploration licence area for none other than the Wafi-Golpu project, which is widely touted to be part of the next generation of PNG's world class mines.
Harmony later farmed out half of these Morobe province interests to Newcrest Mining for more than $A650 million in 2008.
This time around Niumataiwalu, who lives onsite at Mt Kare, aims to see his first gold pour after years of mine planning work in PNG.
Promnitz said he was working with Indochine to rewrite history and make Mt Kare into a success story.
Niumataiwalu is considered one of the most qualified men at Indochine. The explorer has also recruited former Placer Dome vice president John Shaw as a non-executive director.
Shaw was at the Porgera mine when the legendary super high grade Zone 7 deposit was discovered underground back in 1984 and was there with the establishment of the mine in 1989-90.
Zone 7 averaged 27gpt gold over a 5m average width, generating more than 5 million gold ounces.
Placer Dome, which was acquired by Barrick Gold in 2006, arguably had the most effective management team in place for transforming projects into mines in PNG's history. The Porgera open cut and underground mine is still operating. It also established the Misima copper-gold mine.
Importantly, the Mt Kare project is located only 15km southwest of the Porgera mine, which has been producing gold for the last two decades.
Barrick continues to find high grade veins 1000m from the surface. The geology at Mt Kare, including the age of the mineralisation and types of host rocks, is considered to be very similar to that of Porgera, which provides hope that this project will surpass the present target of 125,000 to 150,000 gold ounces per annum for seven years.
Unlike many other explorers, Indochine firmly aims to become a producer. Development costs for the planned operation are not beyond the reach of a company this size and the proposed mining is based on the high grade ore ranging from 2.5gpt gold to 4.5gpt gold.
The prefeasibility study for Mt Kare is due for completion in August, with the two main conceptual open pits targeting depths of no greater than 180m.
On possible options for power supply, Promnitz indicated that future studies could assess whether the existing powerline from the Hides gas-to-electricity plant in the Southern Highlands to Porgera could be duplicated and extended to Mt Kare.
Promnitz said the local development of small hydroelectric power plants targeting 2 to 8 megawatts per annum of capacity could also be under consideration.
While more money will need to be raised to complete a definitive feasibility study, Indochine is already drilling to support these crucial studies, which should pave the way forward for more financing to develop a small mine.
In what is a refreshing change from the typical pace of many other explorers in PNG, Indochine aims to develop the mine within three years.
"We're very much aware that not only we need a ‘can do attitude' to make the project work but we're also very much aware that the biggest challenge to a junior company is time." Promnitz said.
Inevitably there will be drilling for underground mining targets as part of plans to extend the deposit. However, the logistics and helicopters needed for bringing in big rigs to this 3000m-altitude site means that no holes to date have been drilled beyond a depth of 350m.
Despite the rapid progress so far, Indochine has managed the challenges of PNG's resource boom and the demands for all sorts of equipment and materials, including steel. Promnitz singled out Heli Niugini's efforts in particular in providing transport of men and materials in difficult conditions.
"Heli Niugini in PNG has done an absolute stellar job, with the quality of their machines and the quality of their pilots," he said.
"Mt Kare has an interesting history and we had to demonstrate our own credibility and capability. Naturally some people were circumspect at Indochine's ability to get things done."
The perception is often held that any resources project in PNG faces a challenge gaining support from local landowners.
Yet Promnitz does not see any significant impediments in this regard. Somewhat ironically, he attributes this to the fallout of the artisanal mining boom in the Mt Kare region in 1988.
This is based on his own obser-vations in local villages, where he has seen the people have even less now than they had prior to gold being discovered in Mt Kare in the late 80s.
"I actually think this project has more chance than others just because the local people have seen what it is like to have had a gold rush with jars of nuggets and then have absolutely no meaningful income for two decades," he said.
"The Mt Kare project will bring in some very genuine benefits to the area. The ultimate outcome with the customary landowners will be positive in what it has to offer. They are all very savvy when it comes to resource projects. They have seen resource projects which are too skewed towards either infrastructure or cash. It needs a blend of both to work, together with jobs and training."
Promnitz said the local people wanted to see development and genuinely wanted to work towards developing Mt Kare.
Contrary to some of the bad press on the country, Promnitz provided some perspective on why PNG is increasingly becoming sought after by major mining houses.
"There are very few countries where local people actually want to see development," he said.
"Mining has become difficult anywhere in the world. You might as well go to where the size of the prize is large if you are going to be in this business.
"We aim to be developing a high grade open cut gold mine within three years - and there are not many around operating above 2 gpt gold.
"Across the industry, we have seen the gold price trend upwards but costs have risen even faster, thus there has been margin contraction instead of margin expansion.
"Higher grades provide the potential to generate significant margins. This project also has the potential to grow substantially. I think that's why we have some of the largest specialist resource funds in the world as major shareholders. PNG has been known for four decades for having enormous deposits in copper or gold and we are one of the few companies where an investor can get exposure to that upside potential through a junior company.
"Most large deposits in PNG are held by majors."