Gold developer Nusantara Resources has reset the clock on its 2 million-ounce Awak Mas gold project on the island of Sulawesi in Indonesia, forging closer ties with strategic partner Indika Energy and appointing Greg Foulis as its Executive Chairman.
The company has now relocated its Jakarta office to Indika’s nearby premises following ongoing positive dialogue with Indika and engagement with potential banks to provide debt in the form of project financing to develop Awak Mas.
Indika Energy is an IDX-listed, near A$900m market cap company, with considerable financial clout and operating and business experience working in Indonesia.
This knowledge is likely to prove invaluable to Nusantara as it moves its development and exploration efforts forward on Sulawesi.
The company is seeking to finance and progress the gold project after the delivery of a robust DFS last year, which showed that an open pit mining operation could produce about 100,000 gold ounces per annum and generate an impressive after-tax cash flow of about AUD$55m, or about AUD$1m a week, with payback in 4 years.
Last December, Nusantara executed a Relationship Deed with Indika that provided a framework for the companies to accelerate the development of the project, including provisions for Indika to acquire an interest in Awak Mas, by investing at the project level.
In that sense, the company may offer to sell to Indika Energy an interest of not less than 25% in the project itself.
According to Nusantara, if mutually acceptable terms for this sale can be agreed, it is anticipated that proceeds from this project sell down would be applied towards the company’s equity share for the gold project’s overall financing requirements.
The upfront CAPEX to develop the project was estimated to be USD$146m in the DFS.
As part of the administrative changes outlined this week, Nusantara will now build a development team in Indonesia, including technical capabilities aligned with moving the project forward.
Meanwhile, the appointment of Mr Foulis as the company’s Executive Chairman comes about after existing Managing Director, Mike Spreadborough, stepped down from that role with the company now looking to focus its management efforts more in Indonesia going forwards.
Mr Foulis is a resource sector finance executive with over 30 years of diversified experience in a variety of roles.
He was most recently the CEO of ASX-listed Kingsgate Consolidated, a gold mining and development company with interests in Thailand and Chile.
He also led the restructuring, divestment and refocus of that business, including the elimination of a debt burden of over USD$100m.
It is envisaged that the company will appoint an Indonesia-focussed CEO in due course.
With the refocus of Nusantara’s operations to Indonesia, the company will review its corporate and ongoing costs, including savings that will drop out of removing the duplication of administrative overheads.
Nusantara is currently conducting near-mine exploration drilling on several fronts at Awak Mas, as it seeks to build on its impressive ore reserve of 1.14 million ounces grading 1.32g/t gold.
All project construction approvals for the mining infrastructure are already in place and Nusantara signed a new Contract of Work or “CoW” with the Indonesian Government in March 2018, providing security of title out to at least 2050.
The company describes Indonesia as having a low-cost base, excellent infrastructure, access to a skilled workforce and contractors, with a long history of mining and exceptional geology and mineral potential in vastly underexplored swathes of the country.
The Awak Mas goldfield and tenement holdings on Sulawesi cover nearly 144 square kilometres of ground on unreserved non-forestry land, which is a big bonus for the company.
Nusantara believes it could potentially more than double the current mineral resources in the district, given the lack of modern exploration gold targeting outside its known Awak Mas deposits.
With significant boxes ticked including an ore reserve of over 1m ounces, a projected near-100,000 ounce a year production profile, a low stripping ratio, at least 10 years of initial mine life and the opportunity to churn out around a million dollars a week after tax, Nusantara’s Awak Mas gold project looks primed for growth.
This week’s changes outline a greater focus in-country as the company seeks to advance its exploration efforts and further develop its gold project on Sulawesi.
By Matt Birney
