Highlands Pacific is selling its interest in the Kainantu Gold Mine and surrounding exploration tenements in the Kainantu region of Papua New Guinea to Barrick Gold Corporation.

Highlands managing director John Gooding says the sale price of US$141.5 million will secure the group"s future by paying out the gold hedge program of about US$93 million, and the loan facility which totals US$19.8 million.

"On completion of the sale, Highlands will have cash reserves of about US$29 million to pursue other growth strategies and allow it to retain full exposure to its Ramu nickel and Frieda copper/gold assets.

"Barrick is the world's largest gold miner and is operating the Porgera Goldmine in PNG in which it has a 95% interest. Barrick has all the required attributes and capacity to successfully manage the Kainantu operation."

"The Barrick offer effectively recapitalises Highlands while removing the significant financial risk faced by the company and shareholders from a deteriorating hedge book. The sale of Kainantu was the very best outcome for all stakeholders in Highlands," John Gooding says.

At Ramu, Highlands has an 8.56% interest carried to production, which can be increased to 11.3% at no cost to the company after the debt for the financing of the project has been repaid from the project's surplus cash flow. At this time, Highlands will also have the option to purchase up to an additional 9.25% at market value which, if exercised, would take Highlands' total interest to 20.55%.

John Gooding says: "This world-scale nickel/cobalt project being developed by MCC is on track for commissioning in 2009. Planned production is 32,000 tonnes of nickel and 3,100 tonnes of cobalt annually.

"In the world-class copper/gold project at Frieda, Highlands has a 16.22% interest carried to bankable feasibility study stage. The project is managed by Xstrata."

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