The International Resource Journal: Marengo Mining Marengo Mining ================================================================================ admin on 06 October, 2009 12:58:00 Les Emery, Managing Director of TSX and ASX listed Marengo Mining Limited, has been part of the company since its inception back in 2002, when he formed the company. “We went public in Australia in 2003. and acquired the Yandera project in Papua New Guinea (PNG) in 2005. We entered the project as a farm in and then bought out our partner which was a private company in PNG, to give us 100 per cent ownership,” he says. “It’s one of the classic copper-molybdenum- gold systems that you find around the Ring of Fire in the South Pacific and South America. It was discovered back in the 1960’s by the Australian government geological survey and then the central area was explored quite extensively by Kennecott Copper in the late 60’s/early 70’s, then by BHP in the early 70’s.” In the following years, the Yandera project was taken on by Cyprus- Amax of the United States, before a period of inactivity during the 1980’s and 90’s. “There are a number of these type of projects around the world, that were discovered around that same period, when the major companies of the world were spending massive sums trying to find these large base metal deposits,” Emery says. “Things like the oil crisis of the 70’s saw them exit, so these things were effectively reburied for 40-odd years.” Yandera: A Solid History Emery explains that Yandera, a copper project for the most part will derive most of its revenues from its copper stream. However the molybdenum present in the ore has not gone unnoticed either. “Moly represents about 15 per cent of our revenue steam (or will do) so therefore we’re more focused on the copper market with moly as a by-product, I think we all know the strength of the copper market going forward. Moly went through quiet a period last year when everything was suffering. It dropped from the high $20 a pound to as low as about $8 a pound in the early part of this year,” Emery says. “That has rebounded quite strongly to around the $18 mark and that is a reflection of the kick-up on the stainless steel market, because one of the major uses of moly is in stainless steel along with nickel. In terms of long-term predictions I’d say anything from about $12 a pound to $18 . We’ve currently been running our numbers at around $12 a pound so whilst we’re hopeful of the price we’re also pragmatic in saying that this isn’t a bad case to use, so if we get a better revenue stream that’s fine.“ Emery stresses that Papua New Guinea has been a supportive and attractive mining environment throughout Marengo’s time on the Yandera project. “Papua New Guinea is not that well known outside of mining circles. It’s a very strongly mining-orientated country, the first recorded mining there was back in the 1870’s. Modern day mining started around the 1930’s and it’s quite a significant producer of copper and gold, in particular. People sometimes forget that in the 1930’s one of the largest and most active gold fields in the world were the gold fields of New Guinea, as it was then called,” he says. “PNG is a very mining friendly nation. It’s a Commonwealth country and a parliamentary democracy, so it’s got all the good things going for it. The location is great, and it’s also on a direct trade route because north of us in PNG is China – the major consumer of these metals these days.” Emery explains that Marengo’s continued cooperation and efforts amongst the local PNG communities have proved to be very positive for their work in the region. “I think a misconception about Papua New Guinea is that because it is still a developing nation, it is difficult to work there and to build a working relationship with stakeholders.. The requirement for a company to operate in socially and environmentally sustainable and community aligned fashion is certainly very much in the forefront and that is something Marengo has been driving all the time we’ve been there,” he says. “The landowners of Papua New Guinea own the land – the mineral rights are owned by the state for the benefit of all the people. We are not coming in to claim either of those. We are trying to find a way to extract those minerals for the benefits of our shareholders and the benefit of the Papua New Guinea stakeholders. What we can generate out of that is income for the local villages and income for the provinces and national government by way of employment, and the various taxes which emanate from that , including government royalties. It’s a very cooperative relationship and I think if you go in there and demonstrate that you are acting in a responsible and genuine manner you get total support, which is what we get.” Of course, having great foundations and local support are not the only eye-catching aspects of the Yandera project. Yandera: A Cut above the Rest Results to date have indicated some very promising potential in the Yandera project. “From the metallurgical test work we’ve completed to date, we know that the deposit itself produces a very clean high-grade copper concentrate. By clean I mean the amount of deleterious elements – the so-called nasties, such as arsenic and fluorine, the sort of elements that create environmental issues for smelters - it’s almost devoid of or has extremely low levels of those sorts of elements so it makes it an attractive concentrate,” Emery says. “We think that in terms of quality of product it’s going to be in the upper quartile. The other strength it’s got is that it’s only 100 kilometres from the coast and a deep water port. If you compare that to similar projects in South America they have a distance from the coast of three or four hundred kilometres and in a much higher elevation, ours is all less than 2000 metres above sea level, again quite moderate compared to South America. It’s got a number of real pluses that put it ahead of other projects.” Standing out from the rest is something Emery says is an ongoing challenge amongst their peers, however recent developments have really put Marengo in the spotlight. “That’ s always a challenge and I think that what you need is something that really says “hey look at us,” and what eventuated in our recent capital rising in Canada and Australia which brought in almost A$22 million was two investments. One an ongoing investment by our largest shareholder, a resource fund called Sentient Global Resources Fund (of the Cayman Islands),” Emery reveals. “They not only participated to the extent of their existing shareholding of about 24 per cent but they also acquired an additional three per cent of the company in that raising so they’ve moved up to almost 27 per cent. Interestingly we also brought in a new shareholder, Quantum Partners, which is part of the George Soros Group out of New York. They invested almost $10 million into the company to acquire a 19.9 per cent stake in Marengo.” Emery says that the heightened profile Marengo enjoys as a result of these internationally-acclaimed investors has been a great development. “I think that having influential investors such as those has really raised the flag for Marengo and now we have a much higher profile worldwide. Those types of investors do flag to people that we are a cut above the standard copper developer. I think the message is that there are groups that are starting to recognize the potential of Marengo and if they are patient with their investment we are trying to give them the best rewards possible,” he says. Marengo Tomorrow Emery explains that Marengo’s focus for Yandera is the completion of their Definitive Feasibility Study (DFS) and ongoing exploration of other nearby prospects. “The DFS is planned to be completed in December of 2010 and we will also continue an aggressive exploration program over our large landholding. ,” he says. “In terms of our control we have about 100 kilometres of a structure called the Bundi Fault and only four per cent of that structure has ever been drilled, that’s the area where we have the central resource. So that’s 96 kilometres of untested, prospective area. We have now demonstrated what is in 4 kilometres, who knows what we will find in the rest of it?” Emery says that Marengo’s other goal includes further exploration of the new prospect at the Yandera Project, called Kombruku, situated about four kilometres from the existing Yandera resource. “We found substantial surface copper sulphide mineralization which we announced on the stock exchange in April of this year, so it’s been a pretty rapid move from first discovery to drilling. Our longer term goal is to see us move up into project development and ultimately production in 2013 , and to see Marengo as a major copper producer in that part of the world, producing something in the order of initially 120,000 tonnes in contained copper metal, . If the Ok Tedi mine is still in operation in that stage it would make us the second largest copper project in Papua New Guinea,” he explains. With the history of successful exploration at Yandera, a supportive country, excellent investors and excellent prospects open to them however they choose to proceed, Marengo Mining Limited continues on a very interesting road to production, new discoveries and beyond.