Antam rushes for gold mines

Ika Krismantari, The Jakarta Post, Jakarta | Fri, 01/30/2009 2:15 PM  

State-run mining company PT Aneka Tambang (Antam) is intensifying efforts to jack up its gold output by securing more gold mines.

As a slump in global nickel prices has cost the publicly listed mining company dearly, it is seeking to gain control of Martabe gold mine in North Sumatra from its partner Australian-based Oxiana Limited.

Antam president director Alwin Syah Loebis said on Thursday Antam was seeking more than a 50 percent stake in the project, which has a resource base of 6 million ounces of gold and 60 million ounces of silver in a 2,563 square-kilometer area.

Martabe is owned by PT Agincourt Resources, in which Oxiana holds a majority interest.

“Under earlier arrangements, we have secured a 10 percent stake in the project, however we want to increase it,” Alwin said.

Under a memorandum of understanding signed in April last year, Antam had purchased a 10 percent stake in the Martabe project for US$66.5 million, and had an option to acquire a further 10 percent for another US$66.5 million.

The new price, however, is subject to an adjustment based on fluctuations in the gold and silver prices.

“We want to take a majority in the project should the price be attractive and suitable with our budget,” Alwin said, refusing to give figures.

He said Antam had logged the offer to Oxiana, but had no reply yet.

With the acquisition, Antam is expected to be able to reduce its dependency on the nickel business, which accounted for 73 percent of revenue during the first nine months of last year, while the remaining 23 percent was contributed by gold and 4 percent by bauxite and iron ore.

Antam’s revenue slumped by 8 percent to Rp 7.57 trillion ($670 million) in the first nine months of last year as against Rp 8.27 trillion in the same period of 2007 due to the plunge in nickel prices affected by the global economic slowdown.

The company signed on Thursday a memorandum of understanding with the Central Kalimantan administration to develop untapped mineral resources in the province, including high-grade coal, iron ore and bauxite.

Alwin said Antam had budgeted Rp 140 billion this year for exploration, and Rp 3.04 trillion for capital expenditure, up by 301 percent from Rp 758 billion in 2008.

The company expects to produce 12,000 tons of ferronickel this year, down from 17,000 tons in 2008 on declining demand and prices.

Due to difficulties in securing mining concessions, Antam only forecast bauxite and gold output to reach 1 million tons and 2.9 million tons, respectively. The figure is similar to last year’s.