Papua Mining PLC has agreed to a GBP400,000 financing package through share sales, note issuance and loans with funds to be designated to completing a geochemical sampling program at the Mount Visi prospect on New Britain in Papua New Guinea and for an initial phase of drilling.

The exploration company conditionally agreed to raise up to GBP262,000 before expenses by placing 26.2 million shares to certain of its existing shareholders.

Michael Somserset-Leeke, a substantial shareholder with a 23.41% stake who is investing GBP112,000 in the placing, has agreed to provide an interest-free short-term loan of GBP50,000 to the company. This will increase his shareholding to 29.17% following the placing, a separate issue of shares to John Benseman and if other shareholders fail to take up any shares in a separate open offer.

In addition, Michael Somserset-Leeke has agreed to invest a further GBP88,000 by subscribing for convertible loan notes. Shareholder approval is required for issuing the convertibles. The short-term loan will then be repaid and replaced by an equal value of convertibles.

The company is proposing to allow current shareholders to participate in an offer for subscription to raise up to GBP262,000 in addition to the funds raised in the placing.

It has agreed also to issue 2.1 million new shares to John Benseman in place of GBP21,000 of rent invoiced and now payable for the group’s offices in Papua New Guinea covering the period from October 2015 to March 2016.

Papua Mining director Hugh McCullough said, “The Mount Visi target is particularly exciting, given its occurrence at surface and the coexistence of so many strong indicators of nearby mineralized porphyry development.

“We are eagerly awaiting the commencement of the preliminary drilling program and thank our shareholders for showing their continued support to the business.”

During the September quarter Papua Mining was granted a new licence area adjacent to its Mt Visi target. Initial prospecting in the new area confirmed it as a significant porphyry target area and the company has now confirmed Mt Visi as its highest priority.

In addition the company was also granted two other exploration licences on New Britain island.

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