Fraser McGee works with new management to recover a golden opportunity for Triple Plate Junction

When Fraser McGee took the helm of AIM quoted gold explorer Triple Plate Junction TPJ in January this year he was faced with sorting out the focus of the company's business following 12 months of corporate havoc. A proposed de-listing, a reconstructed board, a rebuffed takeover approach and funding issues had left the company with an uncertain future and out of touch with its joint venture partners. It was in a battered, bruised and confused state – and so were its investors.

For McGee, a lawyer by profession and most recently part of RAB Capital's natural resources focused Special Situations Fund, the decision took some careful thinking. Despite RAB's passive investment model, McGee was routinely accused of being a shadow director of many of the companies on his book – and he makes no apologies for it. His reputation for forthright views on small mining companies, weak management, bad governance and worse, meant he was a natural choice when Triple Plate Junction needed a new CEO.

The story of Triple Plate Junction dates back to January 2004, when City entrepreneur Ian Gowrie-Smith brought it to AIM with plans to build a gold exploration group in Vietnam with joint venture partner and industry giant Newmont Mining NEM. The company still holds the Vietnamese licence but Newmont are long gone from that part of the company's business, preferring instead to take their chances in the emerging gold fields of Papua New Guinea. Meanwhile, Triple Plate Junction, sensing the PNG opportunity, also snapped up licences there and now has a series of JV projects with Barrick Gold ABX, Newcrest Mining NCM and Gold Anomaly GOA – as well as what looks set to emerge as a flagship project with Newmont.

Large mining groups have been active in Papua New Guinea for decades but interest in the region took off during 2010 when Harmony Gold HMY and Newcrest, working together on what is known as the Wafi-Golpu project, announced a massive resource upgrade. Current estimates are that the mine contains at least 16 million ounces of gold and 4.8 million tons of copper and that could rise to 40 million ounces and 15 million tons. Harmony believes it could be the largest project of its type in South East Asia. The implications of all this for Triple Plate Junction are threefold. First, its JV partners have pushed PNG higher up the corporate agenda and have reiterated their commitments to their shared projects. Second, its highly prospective Morobe and Wamum projects with Newmont and Barrick respectively lie adjacent to Wafi-Golpu and represent exciting targets. Third, the long-awaited drilling at Morobe looks close, with a possible start date as early as this summer.

Fraser, the last 12 months have been a rollercoaster rise for Triple Plate Junction. Why did you join the company?

I used to work at RAB Capital, at the Special Situations Fund there with Philip Richards, and I saw TPJ was on our books although I didn't know it inside out. The shareholders of TPJ, as you rightly say, had had a hell of a roller coaster ride to the point where this time 12 months ago the stock was sub a penny. In October last year I got a call from a broker who knew me, asking whether I wanted to have a look at it. The proposal was that I would join as CEO, and it wasn't a decision I took lightly I can tell you – deciding whether I should go from the fund side to the actual operations. However, Newmont came out the blocks with an offer and there was absolutely no point in me joining to run a sale process. So I sat on the side-lines and watched Newmont walk away at 6.5p and thank goodness they did because the reason I got involved in this is that it is hugely undervalued. For example, we have an undilutable 25% interest through to production on our JV with Newmont over the entire property which has a growing number of drill targets. The company has got fantastic assets which are very much misunderstood by a large part of the market. It needed some changes in-house and it needed cash, which was raised in November and which breathed into the company the ability to re-engage properly with our joint venture partners and take active steps to progress the business.

When I came on-board, my first task was to engage with all of our joint venture partners and open up all of the lines of communication again to understand what their next steps might and should be. Bear in mind that we signed the JV agreement with Newmont some time ago. Newmont completed Phase I of their earn in two years ahead of schedule, for $6 million, and the results were so positive that they gave us notice in November that they wanted to proceed to Phase II, which was an additional $9 million for 19% to take them to 70%. Bearing in mind also, through all of this discussion, we had the Harmony/Newcrest Wafi-Golpu effect, which is quickening the interest and commitment of everybody who is operating and working or has got an interest in assets, or potential assets, in PNG.

I decided in March that it was time to get down to the projects and meet the people who were actually operating these assets on our behalf. To me it was important to get down there and meet the people. It is not just about meeting them, it is about having a relationship with them which means that you don't have to rely on being the small, almost insignificant, JV partner and getting your monthly reports. That is not how I wanted to be involved.

Among all the other earlier problems, it looks like some of those JV relationships had been allowed to drift and that meant that everyone, including shareholders, had lost sight of what TPJ really had. Is that right?

Absolutely, it was an eye opener getting down there, looking at the actual physical terrain, the topography and understanding the difficulties and the related capital commitments that are required to find these big prizes in PNG. The relationships are very good with all of our JV partners in PNG. For instance, Bill and Patrick Gorman, a mining engineer who chairs our Advisory Board, sat with Newmont for two days during our visit. Because Bill has been involved for so long both with the business and the sites in PNG Newmont genuinely wanted his input into assisting with the designing of the intended drill programmes. So that was great to see and now we have a relationship where we can pick up the phone and discuss what is going on, which is fantastic.

Triple Plate Junction has got four projects in PNG – Morobe with Newmont, Manus Island with Newcrest, Wamum with Barrick and Crater Mountain with Gold Anomaly. Tell me about what is exciting here?

Okay, let's be honest, a very large part of the market is focused on our JV partnership with Newmont Ventures. There are a number of factors but the most important is our proximity to Wafi-Golpu – we are adjacent. The fact that it is Newmont; the size of their pockets, their level of commitment to projects that they put into this category, not to mention the professionalism, the health and safety and the governance and all the rest of the good things that come with operating with these guys.

The thing that has been of great concern for everybody in this is the question of when Newmont would drill – is it going to be this year, next year, the year after? All I would say is that I'm hoping for this to be a very positive summer for our shareholders. I think it is fair to say that their commitment to PNG, and our project, is there. Bear in mind it is the whole project area, it's not just Hide's Creek, it's not just Gumots, it is the whole district. There are two targets this year which I think, all things being equal, will hopefully be drilled.

Before I started, my big target this year was keeping this company where it is, in the hands that it is and getting the drilling started. I think we might just be there. They have already identified other targets, they are flying additional heli-mag, doing more geochem all the time. I have already mentioned this but the reason I got involved in this company is because it is undervalued and it is undervalued on this asset alone. As I mentioned earlier, we have an undilutable 25% interest through to production, not to feasibility, to production. I don't have to put any cash in. When they go into Phase III they can dilute us from 30% to 25% but we can not be diluted any further. The details are that when I go down to 25% they obviously pay for the entire capital commitment, on which they will charge me interest at 4%, which I think is reasonable, and the split on the back when it goes into production is 90/10 until they are repaid.

Morobe isn't the only story in PNG. What progress is now being made at your other projects?

At Manus Island, at the beginning of the year I was concerned that Newcrest would have lost some of their focus in PNG because of Wafi-Golpu. I couldn't have been more wrong. We lost a helicopter in mid-February, with the tragic loss of the life of the pilot, just as we were about to start the heli-mag survey over the entire project site, together with surveying and mapping. On the back of that, and with the health and safety audits that have had to be conducted, we just thought it was going to drag on into the year. Again, I was wrong. The Wafi-Golpu story has just spurred them on, they appear hungrier than ever. I know they have got a reputation for wanting to get on with drilling and I am pleased to say that is the case here too. Our next announcement on this project over the summer will hopefully be that the heli-mag has been started with a view to drilling on the back of positive results soon thereafter.

Turning to Wamum, Barrick was the one for me that was just a bit uncertain because they sent me through what looked like just a care and maintenance budget for the year before our visit. Barrick buy big portfolios of assets and try and further develop them but as yet they are still searching for the prize in PNG. They have spent a lot of money and they just haven't found, as they are all looking for here, the 5 million plus ounce projects that they are after. We even suggested that we might take a couple of targets on the land off them but that wasn't acceptable and, I suspect in light of Wafi-Golpu, they have now decided to get back into the field to check that they haven't missed anything. They have adjusted the budget, which now includes field work at three, potentially four targets – which we really like. So it really will depend on what they find over the summer.

Finally, at Crater Mountain we are partnered with Gold Anomaly, which is an ASX listed company with a market cap of about $50 million. They have a couple of other assets but this is the jewel in the crown for these guys and it is the nearest thing we have got to a resource. They have drilled 2,650 metres and the drilling has stopped while all the data is reviewed. I think the last announcement that they put out was the most positive, we're hoping that that will continue. I think they're probably going to roll up the next four holes together, just to put them in context. But they have announced that they are committed to a further 10,000 metres of drilling. We have said that we will commit for 3,000 of that provided they get a drill rig up there that does 1,000 metres-plus. Of that 3,000 metres we want 2,000 metres to be separate holes of a minimum 1,000 metres plus sundries and in and around the scouted area. They have agreed to that, there will be a rig up there mid-July. As I say, they're extraordinarily hungry; this really is their No. 1 project. They have just raised $3.6 million and that will see them a good way, certainly to get a rig up and get this next phase done with our commitment at just under 20%.

Triple Plate Junction has held ground at Pu Sam Cap in Vietnam for several years. What are your plans for that?

When I was with RAB Capital we used to invest all over the world but we never invested in Vietnam, with the exception of a property deal, certainly never natural resources, and that property deal had its own country related issues. So I had no understanding of the natural resources sector in Vietnam or consequently the workings or otherwise. So one of the first jobs I did was to get on a plane to Vietnam and speak with the government, the IFC and Olympus (together with other natural resource investors and operators), which is the only legal gold operating company there. I wanted to look at the macro development of the economy, the nuances of operating in the commodity sector and really to understand as far as possible what the framework is. I'm a lawyer by profession, not by career; I like definitive frameworks, legislation, regulation. I like them because they provide me an understanding of the risk.

After speaking with all those people I took the view that we had a budget, we had already done some drilling there a few years ago and we had done some initial sampling. On the back of that Bill negotiated a contract for one rig. Then I thought, frankly, there was no point wasting time, we might as well accelerate the front end and see if we have got something viable before the summer. We have just finished drilling five holes with the two rigs, maximum depth was 700 metres, minimum of 110 metres, and we are waiting now on collecting all the results. By mid-July we'll know whether we've got something or not and we can make a definitive decision as to how we progress. That might be with a joint venture partner but hopefully it will be of such great value that we have to do it ourselves.

The company raised £2.5m in a placing priced at 2.5p per share last November. How far will that cash take you and what are your future funding plans?

End of the calendar year, but it could be stretched further. There are no requirements to raise any money at the moment and looking forward we would not want to be too dilutive to our current shareholders if and when we decide to go back to the market.

At the moment we're at Phase II with Newmont and we will have 30% at the end of it. We are doing well on the funds side of things because really we are only contributing to Gold Anomaly/Crater Mountain and Barrick/Wamum, but the budget a Wamum is currently small and so it is really diminutive in terms of eating into the bank account. We are in good shape and the reasons that I joined remain true.

Really for me, this has been about stages. First was tidying up what we have, including the people and the management structure. Second was getting out to the projects. Third is about getting TPJ back on the map and getting people to understand what we've got and the potential thereof. As I say, I'm not selling gold, I'm selling the potential for you to be involved in something which could be very significant.

Fraser, thank you very much for your time.

Thank you.

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