Antam to acquire interest in Martabe Gold, Silver Project

The Jakarta Post 

Antara, Jakarta | Fri, 07/04/2008 6:34 PM 

State mining company PT Aneka Tambang (Antam) on Friday announced it had signed a memorandum of understanding (MoU) with Australian-based Oxiana Limited. 

The basis of the MoU with Oxiana is to cooperate in examining opportunities and to form joint ventures or other cooperative ventures for the exploration, development and operation of precious or base metal or bulk commodity projects within Indonesia, PT Antam said in press statement. 

The first transaction under the MoU to be considered is for Antam to acquire an interest in Oxiana's Martabe gold and silver project in the Indonesian province of North Sumatra. The Martabe gold project is owned by PT Agincourt Resources, in which Oxiana holds a majority interest. 

Antam's new president director, Alwin Syah Loebis, said "the execution of the MoU with Oxiana is in line with our intention to keep gold as an important part of our product mix and to offset the depleting reserves of our gold mine at Pongkor." 

Acquiring gold and diversifying away from nickel were important parts of the company's main strategy to create shareholder value in the medium term, he said. 

Under the MoU, Antam will purchase 10 percent of the Martabe project for US$66.5 million and has an option to acquire a further 10 percent of the Martabe project for a further US$66.5 million, subject to adjustments for movements in the market prices for gold and silver, operating and capital costs and other matters on successful commissioning of the project. 

Antam is also able to acquire a further 5 percent of the Martabe project for a consideration based on the market value of the project at the time. 

This further option is subject to Oxiana approving the expansion of the Martabe project to an annual production rate of not less than 300,000 ounces (9 tons) of gold equivalent production per annum. 

The Martabe gold project involves the development of the Martabe gold and silver deposit in Northern Sumatra, Indonesia, at an estimated capital cost of US$310 million. 

Antam had considered investing in Martabe in 2006 but decided to not pursue the acquisition beyond a certain price.